The government decided to keep the oil price cap at the current level for the time being (wholesale per liter: gasoline 1,934 won·diesel 1,923 won). However, the government said, "We will decide whether to continue the price cap after reviewing the level of stabilization in the Strait of Hormuz this weekend."
Yang Ki-uk, Director General for Industrial Resources and 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 U.S.-Iran end-of-war memorandum of understanding (MOU) takes effect." Yang added, "We will end it when domestic oil prices reach a level where even lifting the price cap would not cause significant volatility."
Domestic gas station prices have moved without major fluctuations recently. On this day, the nationwide average price of gasoline 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%. Still, they remain 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 administrative notice on fiscal support for loss compensation following the implementation of the price cap. According to the notice, the basis for the support amount will be determined by the Minister of MOTI using the cost of crude oil procurement actually incurred by refiners and production and sales costs, allowing for consideration of an appropriate level of margin. However, the Singapore Means of Platts Singapore (MOPS)-based calculation method, which the refining industry has requested, was not reflected.
Settlements will be conducted on a quarterly basis. The amount of support and other matters will be deliberated by the Maximum Amount Settlement Commission, which will consist of up to 20 members, including accounting, legal, and oil market experts and government Commissioners. The list of members is not disclosed.
Deputy Minister Yang said of the refining industry's estimated losses of 3 trillion to 4 trillion won, "It appears to be calculated based on MOPS prices, and the actual compensation will be smaller than that." Yang noted that there would be no difficulty covering it with the 4.2 trillion won budget allocated through the supplementary budget.