Govt fixes fuel supply prices to stabilise market

South Korea has introduced a cap on fuel prices as the ongoing conflict involving Iran continues to unsettle global oil markets and threaten energy supplies.

The country’s energy ministry confirmed that the measure took effect from midnight on Thursday, March 12, saying the move was aimed at reducing the impact of rising fuel costs on the domestic market.

Officials explained that tensions in the Middle East have triggered instability in the global oil market, pushing up prices and creating concerns for countries that rely heavily on imported energy.

As Asia’s fourth-largest economy, South Korea imports a large portion of its oil, with many shipments passing through the Strait of Hormuz — a critical global shipping route for crude oil.

Under the new policy, the government has placed a limit on the supply prices that refiners can charge distributors and fuel stations. The cap does not directly control the final retail price paid by consumers at the pump.

Authorities fixed the maximum supply price for regular gasoline at 1,724 won (about $1.70) per litre, while automotive diesel has been capped at 1,713 won per litre.

According to officials, the limits are lower than the average prices refiners submitted on Wednesday, March 11, suggesting the government is trying to quickly stabilise the local fuel market.

The price control will remain in place for two weeks initially, after which the government will review the situation and decide whether adjustments are needed based on global oil market trends.

In addition to the price cap, Seoul has also moved to strengthen its energy security by securing a deal to import about four million barrels of crude oil from the United Arab Emirates.

Authorities added that the country currently maintains strategic oil reserves capable of covering around seven months of national consumption, which could help cushion the impact of possible supply disruptions caused by the ongoing tensions.