"International Oil Prices Near $100... Domestic Gasoline Prices Approaching 1800 Won"

Concerns Over Energy Crisis if Russian Invasion Becomes Reality
Some Predict "Up to $125"
Domestic Gasoline Prices Near 1,800 Won per Liter

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina, Reporter Oh Hyung-gil] As fears of war surrounding Ukraine rapidly escalate, international oil prices have surged. It is now considered only a matter of time before prices surpass $100 per barrel. There are growing concerns that if Russia, the world's third-largest oil producer, proceeds with its invasion of Ukraine, the entire world will be engulfed in an energy crisis. As international oil prices soar, gasoline prices in the Seoul area are on the verge of breaking the 1,800 KRW per liter mark again after three months. With the effect of the fuel tax reduction disappearing, the burden on the common people's economy is increasing, and companies are worried about rising costs.

On the 14th (local time), West Texas Intermediate (WTI) crude oil prices closed at $95.46 per barrel on the New York Mercantile Exchange, up 2.53% from the previous session. This is the highest level since September 2014. The WTI price has risen more than 25% this year. On the same day, Brent crude on the London ICE Futures Exchange also reached around $96 per barrel, marking the highest level since 2014.

This sharp rise in oil prices is due to growing fears that Russia's invasion of Ukraine could become a reality before the Beijing Winter Olympics conclude. The United States, which has warned that a Russian invasion could happen at any time, closed its embassy in Kyiv, the capital of Ukraine, on the same day. Ukrainian President Volodymyr Zelensky, who had previously denied imminent invasion rumors, mentioned on Facebook, "I have heard that February 16 is the date of the attack." This week is effectively a critical turning point.

If the invasion of Ukraine becomes a reality, oil prices are expected to rise further. Nishant Bhushan, a market analyst at global energy research firm Rystad Energy, said, "Russia is one of the world's largest crude oil producers," adding, "If there is disruption in the flow of crude oil, WTI and Brent prices could jump above $100 per barrel."

It is analyzed that this will add fuel to the fire in a situation where global supply is already insufficient compared to demand. Russia's daily crude oil production reaches 11.2 million barrels. Its daily exports amount to 5 million barrels, accounting for about 12% of global crude oil trade volume. Goldman Sachs, in an investor note released on the same day, forecasted that international oil prices could further rise to as much as $125 per barrel.

Domestic fuel prices are also fluctuating. Gasoline prices in the Seoul area are once again threatening the 1,800 KRW per liter level after three months since the fuel tax reduction. According to the Korea National Oil Corporation's oil price information site Opinet on the 15th, nationwide gasoline prices rose by 4.12 KRW from the previous day to 1,714.58 KRW per liter, while Seoul gasoline prices increased by 6.09 KRW to 1,783.01 KRW per liter. Since international oil prices typically reflect in domestic prices within 2 to 3 weeks, gasoline prices are expected to exceed 1,800 KRW soon.

A business official said, "The impact of international oil price increases on gasoline prices could become more pronounced by the end of this month or next month," adding, "With the uncertainty over how the Ukraine situation will settle, rising oil prices will be a significant management variable for the time being."

Meanwhile, amid the surge in international oil prices, the three major indices on the New York Stock Exchange all closed lower. By sector, the S&P energy sector slid more than 2% from the previous session, moving inversely to oil prices. Marathon Oil (-4.50%), Diamondback Energy (-3.76%), and ExxonMobil (-1.53%) all closed down. The price of gold, a representative safe-haven asset, rose. The yield on the U.S. 10-year Treasury note also climbed to 1.99%, approaching 2% again.

This content was produced with the assistance of AI translation services.