Oil prices plummet 30%, but Korean gas prices stay stubbornly high

Despite a significant drop in international oil prices, South Korean consumers are still paying high prices at the pump. International crude prices, such as Dubai oil, have fallen by over 30% in the past month, nearing pre-war levels. Yet, gasoline prices at domestic gas stations have barely budged, remaining over 300 won higher than before the conflict.

This lag in price reflection is attributed to several factors. It typically takes two to three weeks for international price drops to filter through to retail prices. Additionally, Iran's recent declaration to re-block the Strait of Hormuz has introduced new volatility, causing oil prices to fluctuate again. The government's price cap policy also plays a role; while it moderated price increases during surges, it now prevents the full benefit of price drops from reaching consumers.

The situation is further complicated by ongoing geopolitical tensions. Iran has threatened to re-block the Strait of Hormuz, citing Israeli airstrikes. In response, U.S. President Donald Trump has suggested imposing transit fees on ships passing through the strait if final negotiations with Iran fail. While diplomatic talks are ongoing, the uncertainty surrounding the Strait of Hormuz continues to impact oil prices.

Beyond fuel costs, logistics expenses are also remaining high, affecting various industries. The shipping index for supertankers on the Middle East-China route has increased significantly since the initial peace agreement. Similarly, container freight rates have surpassed previous highs, impacting small and medium-sized businesses that are experiencing export disruptions. The Ministry of SMEs and Startups has reported a rise in related complaints from these businesses.