KB News Desk
The South Korean government will keep fuel price ceilings unchanged for another four weeks as renewed tensions in the Middle East push global oil prices higher, the Industry Ministry said Friday.
The Ministry of Trade, Industry and Resources said the maximum prices for gasoline, diesel and kerosene supplied by local refiners to gas stations will remain unchanged from the previous four-week period at 1,784 won ($1.29), 1,773 won and 1,380 won per liter, respectively, beginning Saturday.
The decision comes as global crude oil prices have begun rising again amid renewed uncertainty in the Middle East, although the government said domestic oil supplies remain stable.
Brent crude, which had dropped to the $70-per-barrel range earlier this month amid hopes of easing tensions, rebounded to the $90 range as of Thursday. Global prices for refined petroleum products have also resumed their upward trend.
Despite the renewed volatility, the ministry said South Korea has secured crude oil and naphtha supplies at levels equivalent to about 100 percent of the amount recorded a year earlier.
Domestic fuel prices have also remained relatively stable.
The nationwide average retail price of gasoline stood at 1,862 won per liter Friday, down slightly from 1,867 won at the beginning of the month. Diesel prices fell to 1,845 won from 1,850 won over the same period.
The government cited inflation concerns as a key reason for leaving the price caps in place.
South Korea’s consumer price index rose 2.8 percent in July from a year earlier. The government estimated that inflation could have reached 3.6 percent without the fuel price cap system.
“We decided to maintain the maximum prices after closely monitoring international oil prices and taking into account the recent burden on household living costs,” the ministry said.
It cited additional pressure on households from extreme weather, including recent heat waves and heavy rainfall, as a reason for maintaining the current caps.
The government said it will keep the price ceiling system in place while closely monitoring developments in the Middle East, the domestic petroleum supply situation, inflation and household costs.
With the wholesale caps unchanged, retail gasoline prices are expected to remain around the 1,800-won-per-liter level.
The South Korean government implemented the price ceiling system in March amid concerns over fuel supplies stemming from tensions in the Middle East. The caps have remained in place since then, and are subject to review every four weeks.
Meanwhile, the task of determining compensation for refiners’ losses stemming from the price cap system is expected to take longer than initially anticipated.
The ministry completed the formation of a settlement committee last month to review compensation claims and is processing reimbursements for losses between March 13 and June 30.
