Government 'Unlikely to Phase Out Oil Price Cap' as Prices Rise

The South Korean government is likely to maintain its oil price ceiling system for the foreseeable future amid escalating tensions between the U.S. and Iran, which have driven global oil prices upward. Director Yang Ki-wook of the Ministry of Trade and Industry's Industrial Resources and Security Affairs office stated during a briefing that while abrupt market fluctuations could necessitate adjustments, the likelihood of phasing out the system remains low. The government has frozen the 8th phase of oil price caps at levels slightly below the previous phase: 1,784 won per liter for gasoline, 1,773 won for diesel, and 1,380 won for heating oil, effective from midnight on the 25th. These prices will remain in place for four weeks, though officials acknowledged potential mid-course adjustments due to rapid market volatility. The situation has worsened as the Strait of Hormuz, a critical oil shipping route, has seen a drastic drop in tanker traffic, with only one ship passing through on the 23rd, compared to over 20 the previous month. Meanwhile, the Bab al-Mandeb Strait, an alternative route, faces blockades by Yemen's Houthi rebels. Global oil prices surged sharply, with U.S. West Texas Intermediate crude rising 6.2% to $92.19 and Brent crude jumping 7% to $100.69. The government also extended an oil tax reduction measure until September, citing limited alternative supply options.