South Korea Freezes Oil Prices Despite Global Surge
The government extended the price ceiling for a 16th consecutive week. International crude benchmarks exceeded $100 per barrel.
The Ministry of Trade, Industry and Resources froze retail oil prices for a fourth week. This marks the 16th consecutive week with unchanged maximum prices. The decision was announced on the 18th. It takes effect at 0:00 on the 19th.
Global oil prices have surged past $100 per barrel. Brent crude stood at $104.8 per barrel. WTI crude reached $101.9 per barrel. The ministry cited a weakening won as a key factor. This currency shift reduces the cost impact of imported oil.
Exchange rate drives pricing decision
The ministry officially cited the exchange rate for the first time. The won-dollar rate is weaker than in March. Prices were last raised by 210 won per liter in March. The current ceiling is 1,784 won per liter for gasoline. Diesel is capped at 1,773 won per liter. Heating oil remains at 1,380 won per liter.
The government aims to stabilize inflation. The August consumer price index rose 3.1% year-on-year. Officials noted that the freeze protects public livelihoods. They also pointed to the Chuseok holiday period. The ministry reserved the right to adjust prices if conditions change.
Record consumption under price controls
Criticism suggests the ceiling fuels insensitivity to costs. July gasoline consumption hit a record 8.86 million barrels. This figure reflects refinery deliveries rather than retail sales. Retail gasoline sales fell 2.1% year-on-year. Diesel retail sales dropped 8.4% over the same period.
Data from Korea National Oil Corporation Petronet shows these trends. The ministry stated it will monitor consumption closely. Officials said they will consider future adjustments. The current system has been in place since June 27.
Refinery compensation to conclude by year-end
The government will settle refinery losses by December. The ministry will receive data by month-end. Calculations will occur in November. Payments will follow a one-month objection period. The total compensation is estimated at under 4.2 trillion won.
Without the ceiling, gasoline would exceed 1,800 won per liter. Diesel would exceed 2,100 won per liter. The national average gasoline price was 1,858.5 won. The government has contracted over 90% of September-October crude imports. Swaps with government reserves have supplied 5.8 million barrels.
