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

Up 25% This Year, Highest in 7 Years
Concerns Over Energy Crisis if Russia Invades
Some Say "Could Reach $125"
Domestic Gas Prices Expected to Exceed 1800 Won

[Asia Economy Reporter Oh Hyung-gil, New York=Special Correspondent Jo Seul-gi] 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 could 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 fading, the burden on the common people's economy is increasing, and companies are worried about rising cost pressures.

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 increase this year exceeds 25%. 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 a result of spreading fears that Russia's invasion of Ukraine could materialize 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 am hearing that February 16 is the date of the attack." This week is effectively a turning point.

If the invasion of Ukraine becomes a reality, oil prices are expected to rise even 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 oil flows, WTI and Brent prices could jump above $100 per barrel."

[Image source=Yonhap News]

Analysts say this will pour fuel on an already tight supply-demand balance worldwide. 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 rise further to $125 per barrel.

As international oil prices surge, domestic fuel prices are also fluctuating. Gasoline prices in the Seoul area are once again threatening the 1,800 KRW per liter mark after three months since the fuel tax cut.

According to Opinet, the oil price information site operated by the Korea National Oil Corporation, the nationwide average gasoline price on the 14th was 1,714.58 KRW per liter, up 4.12 KRW from the previous day. In Seoul, the price rose 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.

The rise in international oil prices is expected to severely impact the air logistics and petrochemical industries. Kim Pyung-jun, head of the Korea Petrochemical Industry Association, said, "If international oil prices rise above $80 per barrel, it will be highly disadvantageous in competition with shale gas or natural gas, which are considered alternative energy sources," adding, "It is also a burden that recent oversupply in the U.S. and China makes it difficult for oil price increases to be reflected in product prices."

A business insider said, "The fluctuation in gasoline prices due to the rise in international oil prices could become more pronounced by the end of this month or next month," adding, "With the uncertainty over how the Ukraine situation will be resolved, the rise in oil prices will be a significant management variable for the time being."

Meanwhile, amid the sharp rise 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 rose to 1.99%, approaching 2% again.

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