"Ukraine Invasion Bends the Back of the Common People... Gasoline Prices Also Surge"

Nationwide Average 1,918 Won... Highest in 14 Years

Impact of Surging Demand in Europe

Gasoline Also Highest Since October 2012

The scene at a gas station in Seoul on the 23rd. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Chaeseok] Due to the surge in international diesel prices following Russia's invasion of Ukraine, domestic diesel prices at gas stations are also showing a sharp increase. International diesel prices have soared as supply disruptions occurred mainly in European countries highly dependent on Russian diesel, coupled with news of various countries implementing or considering bans on Russian crude oil. Domestic diesel prices at gas stations, which follow international diesel prices with a lag of about 2 to 3 weeks, are also recording their highest levels since 2008.

According to the Korea National Oil Corporation's oil price information service OPINET on the 26th, the nationwide diesel retail price in the fourth week of this month (20th-24th) rose by 15.6 KRW from the previous week to 1,918.1 KRW per liter. This is the highest price in about 14 years since the fourth week of July 2008 (1,932 KRW). The price gap with gasoline narrowed to 84 KRW this week. Due to the differential application of fuel tax, domestic diesel prices are usually about 200 KRW cheaper than gasoline, but the diesel price increase has been steeper than that of gasoline, narrowing the gap. In Seoul, diesel prices exceeded 2,000 KRW per liter during the week. A representative from the Korea Petroleum Association explained, "Since last year, refiners have lowered operating rates and reduced production, causing diesel inventories in Europe to fall to the bottom. Amid this, the Russia-Ukraine conflict triggered a surge in diesel orders in the international market, resulting in a supply shortage."

As part of sanctions against Russia, the United States recently imposed a ban on Russian crude oil, causing international oil prices to jump once. The European Union (EU) is also discussing related measures, which has driven international diesel prices even higher. According to industry sources, Russian diesel accounts for about 60% of Europe's diesel imports. As of the afternoon of the previous day, the daily average diesel retail price nationwide was 1,919.7 KRW per liter. Jeju Island, with the highest price nationwide, has already surpassed the 2,000 KRW mark at 2,023 KRW per liter, while Seoul recorded 1,998 KRW. In some gas stations, diesel prices have even surpassed gasoline prices.

Diesel is used as fuel for commercial vehicles such as trucks and delivery vans, as well as construction equipment like excavators and concrete mixers. Recently, freight organizations burdened by the sharp rise in diesel prices have taken to the streets demanding government support measures. The Korea Petroleum Association forecasted, "Considering the trend of rising international diesel prices, domestic diesel prices are expected to continue increasing for the time being."

Gasoline prices are also still on the rise. Meanwhile, gasoline prices in the fourth week of this month rose by 7.5 KRW from the previous week to 2,001.9 KRW per liter. Domestic gasoline prices have risen for 10 consecutive weeks, marking the highest level since the fourth week of October 2012 (2,003.8 KRW). In Jeju, the region with the highest prices, gasoline rose by 9.1 KRW to 2,108.2 KRW per liter, while in Jeonbuk, the region with the lowest prices, gasoline rose by 6.3 KRW to 1,974.9 KRW.

International oil prices also showed an upward trend this week. The price of Dubai crude, the benchmark for domestic imported crude oil, rose by 8.2 dollars from the previous week to 112.1 dollars per barrel. International gasoline prices rose by 8.9 dollars to 130.1 dollars per barrel, and international diesel prices rose by 21.3 dollars to 147.5 dollars per barrel.

Given this situation, the government decided to extend the 20% fuel tax reduction, originally scheduled to end at the end of next month, by three months. Theoretically, the 20% fuel tax cut results in a price reduction of 164 KRW per liter for gasoline and 116 KRW per liter for diesel. 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.