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🇰🇷 South Korea /Conflict & Security

South Korean Refiners Accused of Price Collusion Amid Middle East Conflict

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources Under investigation
  • South Korean prosecutors revealed that major oil refiners colluded to raise gasoline prices following the outbreak of the US-Israel-Iran conflict.
  • Internal communications showed employees at S-Oil discussing profiting from the war, with one saying, "A company that makes money from war. We'll probably make 2 trillion won this year."
  • The investigation also found that refiners used their dominant market position to enforce exclusive purchase contracts with gas stations, further contributing to price hikes.

South Korean prosecutors have uncovered evidence of price collusion among major oil refiners, who allegedly exploited the US-Israel-Iran conflict to significantly increase domestic fuel prices. Investigations revealed that HD Hyundai Oilbank and SK Energy shared pricing information since July 2024, coordinating their strategies to set oil prices. Prosecutors believe these two companies agreed to a substantial price hike following the conflict's outbreak, with GS Caltex and S-Oil following suit.

A company that makes money from war. We'll probably make 2 trillion won this year.

— S-Oil employeeAn internal message from S-Oil's pricing department discussing the financial opportunities presented by the US-Israel-Iran conflict.

The domestic oil market is highly concentrated, with the four major refiners controlling 98.6% of the market share. This oligopolistic structure allows for rapid price increases when refiners act in unison. Internal communications from S-Oil, dated March 4, 2024, just days after the conflict began, show employees discussing the war as a profit opportunity. One message read, "A company that makes money from war. We'll probably make 2 trillion won this year," and another exclaimed, "Trump, hooray!" This sentiment highlights a cynical approach to capitalizing on geopolitical instability.

Trump, hooray!

— S-Oil employeeAnother internal message from S-Oil, expressing a seemingly inappropriate sentiment regarding the geopolitical situation and its potential financial benefits.

Beyond collusion, the investigation also pointed to the refiners' abuse of their dominant position over gas stations. Through "exclusive purchase contracts," refiners compelled gas stations to buy exclusively from them, threatening legal action or other penalties for non-compliance. Messages recovered by prosecutors revealed intentions to "make them suffer through lawsuits" if stations violated these contracts.

Ultimately, this unreasonable distribution structure leads to increased oil prices for self-operated gas stations, which in turn leads to increased oil sales prices to consumers, passing the damage onto the general public.

— Seoul Central District Prosecutors' OfficeThe prosecution's explanation of how the refiners' practices harmed consumers.

Prosecutors stated that this "unreasonable distribution structure" led to higher prices for self-operated gas stations, which were ultimately passed on to consumers. Furthermore, the refiners allegedly provided false reports to the Ministry of Trade, Industry and Energy, understating their selling prices to gas stations to conceal their profiteering during a period of special price management for essential goods. The companies are reportedly cooperating with ongoing investigations.

We are currently assessing the facts of the reports and will cooperate with future investigations and trials.

— Oil industry officialA representative from the oil refining industry commented on the ongoing investigation.
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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