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🇰🇷 South Korea /Economy & Trade

South Korea extends oil price freeze for four more weeks to ease citizen burden

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • The South Korean government will freeze the maximum price for oil products for another four weeks to ease the burden on citizens amid rising inflation and interest rates.
  • This decision maintains gasoline prices at around 1,800 won per liter, despite recent spikes in international oil prices due to Middle East tensions.
  • The government aims to stabilize consumer prices while monitoring the volatile geopolitical situation and exploring alternative shipping routes.

South Korea's government has decided to extend its freeze on the maximum price of oil products for an additional four weeks. This move aims to alleviate the financial strain on citizens grappling with rising inflation and interest rate hikes.

The decision to freeze the maximum price is a measure that considers inflation and the burden on people's livelihoods.

— Ministry of Trade, Industry and EnergyExplaining the rationale behind the government's decision to extend the oil price freeze.

The decision comes despite a recent surge in international oil prices, fueled by escalating tensions between the United States and Iran and reduced shipping through the Strait of Hormuz. The government's priority is to maintain stability in the domestic market and ease the burden on households, particularly concerning diesel prices which directly impact essential workers like truck drivers and delivery personnel.

Under the extended freeze, the maximum price for gasoline will remain at 1,784 won per liter, diesel at 1,773 won, and kerosene at 1,380 won. This policy, first implemented in March, caps the price at which refiners supply oil products to gas stations and distributors. The Ministry of Trade, Industry and Energy stated that the current maximum prices are significantly lower than estimated supply costs for refiners, suggesting the cap is effectively controlling consumer price increases.

Although prices have risen compared to a month ago, it depends on where you set the baseline. The impact of prices falling significantly in late June and early July means they are still at a low level compared to the beginning of the war in March.

— Yang Ki-wook, Director of Industrial Resource Security at the Ministry of Trade, Industry and EnergyAddressing the recent increase in international oil prices and comparing them to earlier levels.

While the government has secured sufficient crude oil imports for the coming months, it continues to monitor transportation risks, including potential disruptions in key shipping lanes like the Suez Canal. Refiners are reportedly exploring alternative routes. The long-term financial implications for refiners, who may be eligible for compensation for losses incurred due to the price cap, remain a point of discussion, though the government believes current fiscal impacts are manageable.

The situation changes frequently, so if there are rapid changes, we can adjust.

— Yang Ki-wook, Director of Industrial Resource Security at the Ministry of Trade, Industry and EnergyCommenting on the possibility of adjusting the price cap before the four-week period ends if the situation changes drastically.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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