South Korea Lowers Fuel Price Ceilings Amid Easing Mideast Tensions

SEOUL, June 26 (Yonhap) -- South Korea on Friday decided to lower price ceilings on fuel products, citing easing geopolitical tensions in the Middle East, while deciding to keep the price cap system in place for the time being.

Maximum prices for regular gasoline, diesel and kerosene supplied to gas stations by local oil refiners will each be lowered by 150 won to 1,784 won (US$1.16), 1,773 won and 1,380 won per liter, respectively, according to the Ministry of Trade, Industry and Resources.

The new prices will take effect Saturday.

"Following the memorandum of understanding between the United States and Iran to end hostilities, the number of oil tankers passing through the Strait of Hormuz has increased, and uncertainties surrounding the geopolitical situation in the Middle East have eased to some extent," the industry ministry said.

South Korea adopted the price ceiling system in March in a bid to stabilize domestic fuel prices amid volatility in the global energy market caused by the effective closure of the crucial waterway.

The industry ministry said it decided to lower the caps to preemptively reflect the decline in global crude oil prices.

The industry ministry said the latest prices will remain in effect for four weeks, but it plans to adjust the pricing cycle flexibly depending on changes in market conditions.

The latest measure, meanwhile came as the government aims to tackle inflation after consumer prices rose 3.1 percent last month from a year earlier. It marked the sharpest increase in 26 months, matching the pace recorded in March 2024.

Petroleum product prices shot up 24.2 percent on-year in May, accounting for 0.92 percentage point of the overall consumer price increase. It marked the sharpest increase since the 35.2 percent spike recorded in 2022 during the early stage of Russia's invasion of Ukraine.