As international oil prices plunged after the United States and Iran agreed to a two-week cease-fire, domestic gas station operators are engaged in a fierce game of chicken over securing supply. With the third oil price ceiling set to be announced on the 9th, the sharp drop in crude prices has made it harder to forecast petroleum product prices. For now, many say they will secure only two weeks' worth of inventory and watch how things develop.
As Iran is assessed to have effectively agreed to open the Strait of Hormuz, international oil prices are plunging. As of 3:10 p.m. on the 8th, West Texas Intermediate (WTI) May futures were down 15.46% from the previous session at $95.49 per Barrel. June Brent futures were down 14.24% at $93.71 per Barrel. It is the first time since on the 2nd that WTI and Brent futures have fallen below $100.
With international oil prices plunging, the gas station industry is clearly gauging how much petroleum product to order. Ahead of the announcement of the third price ceiling, many had judged it advantageous to secure as much inventory as possible on the assumption product prices would keep rising, but that outlook has flipped. On an online community of gas station operators that day, a post likening inventory orders to "a gamble" also drew attention.
An owner-operated gas station manager said, "I expected the third oil price to go up, so I first topped up only two weeks' worth at the second price. I was going to fill it full since prices seemed set to keep rising, but I canceled part of the order this morning because I don't know what the fourth price will be."
Given the recent uptrend in international petroleum product prices, the outlook that the third ceiling would also rise had been dominant. The government applies the rate of change in international petroleum product prices to the prior ceiling to calculate the new ceiling. According to Opinet, the Singapore gasoline price, which serves as the basis for calculating domestic petroleum product prices, rose to as high as $157.22 per Barrel on the 23rd of last month and moved in the $130–$140 range over the past week.
Some also say that, with the government artificially suppressing market prices to stabilize inflation and considering international oil price trends, it will be difficult to raise the third ceiling further. A Ministry of Trade, Industry and Resources official said, "The level of the third ceiling will be decided by comprehensively reflecting market conditions and recent oil price movements."
The gas station industry has long complained that the price ceiling system has increased management burdens. They say there is nothing left when competing on price against refiner-operated stations and government-branded "Altteul" stations, which have relatively cheaper supply prices. Some operators say they took losses by selling at lower prices after the ceiling took effect the fuel they had bought at high prices from refiners right after the war broke out.
Another owner-operated gas station official said, "A customer today asked, 'International oil prices fell, so why haven't pump prices gone down?' and both gasoline and diesel are being sold below 1,950 won, but foot traffic is down to about half of usual, which is frustrating."