The government decided to keep the oil price cap at the current level for the time being (wholesale price per liter: gasoline 1,934 won·diesel 1,923 won). However, the government said it will decide whether to continue the price cap after assessing the stabilization level of the Strait of Hormuz this weekend.
Yang Gi-uk, Deputy Minister for Energy and Resource Security at the Ministry of Trade, Industry and Resources, said at a briefing of the Middle East Situation Response Headquarters on the 18th, "There will be many changes this weekend as the cease-fire memorandum of understanding (MOU) between the United States and Iran takes effect." He added, "We will end it when domestic oil prices reach a level where there would be little volatility even if the price cap is lifted."
Domestic gas station prices have moved with little fluctuation recently. On this day, the nationwide average gasoline price was 2,008.89 won per liter and diesel was 2,003.65 won. From the previous day, gasoline fell 0.005% and diesel fell 0.021%. However, prices are still 18.7% and 25.4% higher, respectively, than before the war (on Feb. 27).
On this day, the Ministry of Trade and Industry (MOTI) issued an advance notice of administrative legislation on fiscal support for loss compensation under the price cap system. According to the notice, the support amount standard is set by the Minister of MOTI based on costs such as crude import costs and production and sales expenses actually incurred by refiners, and an appropriate level of margin may be considered. However, the Singapore Mean of Platts Singapore (MOPS)-based calculation method requested by the refining industry was not reflected.
Settlement will be conducted on a quarterly basis. The Price Cap Settlement Committee, composed of up to 20 accounting, legal, oil market experts, and government Commissioners, will deliberate on matters such as the size of the subsidies. The list of members is not disclosed.
Deputy Minister Yang said of the refining industry's estimated loss of 3 trillion to 4 trillion won, "It appears to have been calculated based on the MOPS price, and the actual compensation amount will be smaller than that." The explanation was that there would be no difficulty covering it with the 4.2 trillion won budget allocated in the supplementary budget.