Fuel Prices Rise for 7 Consecutive Weeks Amid 'Ukraine Invasion'... Fuel Tax Reduction Extended Until End of July

This Week's Average Price: 1,764 KRW per Liter
Seoul-Jeju Prices in the 1,800 KRW Range
Prices Expected to Rise Further for a While

On the 4th, fuel price information is displayed at a gas station in downtown Seoul as oil prices rise due to Russia's invasion of Ukraine and other factors. Photo by Moon Honam munonam@

[Asia Economy Reporter Moon Chaeseok] Due to Russia's invasion of Ukraine, international oil prices have surged, causing domestic gasoline prices to rise for seven consecutive weeks through this week. Although the government has decided to extend the 20% fuel tax reduction, which was set to expire at the end of next month, by three months until the end of July, the domestic gasoline price increase is expected to continue for the time being due to the impact of soaring international oil prices.

According to Opinet, the oil price information site of the Korea National Oil Corporation, the average gasoline price at domestic gas stations in the first week of this month was 1,764.0 KRW per liter, up 24.2 KRW from the previous week. Seoul and Jeju both recorded prices exceeding 1,800 KRW. Domestic gasoline prices had fallen for nine consecutive weeks following the fuel tax reduction implemented in mid-November last year but reversed to an upward trend earlier this year due to the surge in international oil prices.

The recent weekly price increase has been in the 20 KRW range for four consecutive weeks. If this trend continues, the nationwide average gasoline price is expected to exceed 1,800 KRW per liter next week, returning to levels seen before the government's fuel tax reduction.

As of the afternoon of the previous day, the nationwide average gasoline price at gas stations was 1,786 KRW per liter. By region, Jeju, the highest-priced area, had an average gasoline price of 1,831 KRW per liter this week, while Busan, the lowest-priced area, was 1,736 KRW per liter. Seoul was the second most expensive nationwide at 1,827 KRW per liter, following Jeju. By brand, GS Caltex gasoline was the most expensive at 1,771.9 KRW per liter, while budget gas stations offered the cheapest price at 1,732.9 KRW per liter. The nationwide diesel price at gas stations also rose by 26.8 KRW from the previous week, reaching 1,591.3 KRW per liter.

International oil prices continued to rise due to Russia's invasion of Ukraine and other factors. The average price of Dubai crude, the benchmark for imported crude oil in Korea, this week was $105.6 per barrel, up $10.4 from the previous week. Dubai crude surpassed $100 for the first time in about seven and a half years since September 2014. West Texas Intermediate (WTI) crude briefly surged to $116.57 per barrel on the 3rd of this month, marking the highest price in 14 years since September 2008.

This week, the average international gasoline price rose by $9.3 to $120.3 per barrel. There are analyses suggesting that if Russian energy is included in sanctions by the United States, the European Union (EU), and other Western countries, supply shortages could push international oil prices up to $150 per barrel. Typically, domestic gasoline prices follow international oil price trends with a lag of about 2 to 3 weeks. Given the recent continued rise in international oil prices, domestic gasoline prices are expected to keep increasing for the time being.

In response, the government has decided to extend the 20% fuel tax reduction for three months. The 20% fuel tax cut theoretically lowers gasoline prices by about 160 KRW per liter. The government also plans to consider expanding the fuel tax reduction if international oil prices rise more steeply.

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