The government said on the 24th it will freeze the maximum oil prices to be applied for four weeks from midnight on the 25th at current levels. Accordingly, based on refinery supply prices, the caps are 1,784 won per liter (L) for gasoline, 1,773 won for diesel, and 1,380 won for kerosene.
Yang Gi-uk, Director General for Industrial and Resource Security at the Ministry of Trade, Industry and Resources, said at a briefing on the Middle East situation and the oil price cap the same day that "international oil prices have surged due to worsening conditions in the Middle East, but we will maintain the cap in consideration of inflation and the burden on people's livelihoods." The decision took into account the recent 3% range inflation rate and the Bank of Korea's key rate hike (annual 2.50%→2.75%), which have increased the burden on the working class economy.
As exchanges between the United States and Iran have intensified again recently, international oil prices on the 23rd topped the $100 mark, with Brent crude at $101 per barrel. West Texas Intermediate (WTI) was $92, and Dubai crude was $97. Compared with the first week of this month (Brent $72, WTI $69, Dubai $66), prices rose about $30 in three weeks.
However, the Deputy Minister explained, "On a monthly average, July's international oil prices (Brent $82, WTI $77, Dubai $75) are lower than the June averages (Brent $84, WTI $82, Dubai $80) and are not higher than when the war first began in March."
Domestic gas station prices have declined since the 27th of last month, when the oil price cap was cut by 150 won per liter, and are now in the 1,800-won range. As of the 23rd, the nationwide average retail prices are 1,871 won per liter for gasoline and 1,856 won for diesel. Due to the current price cap system, the suppressed upward factors are assessed at about 100 won for gasoline and about 300 won for diesel.
The Ministry of Trade and Industry (MOTI) said it will operate the price cap system by comprehensively considering the Middle East situation, oil supply and demand, inflation and people's livelihood burdens, and the need for demand management. Depending on the situation in the Middle East, it plans to adjust prices even before the four weeks are up.