Exchange Rate Tops 1,500 Won, Oil Nears $100... Consumer Relief from Fuel Price Drop Remains Limited

Gasoline at 1,836 Won Today
Limited Impact Felt Due to Small Price Drop
Exchange Rate and Oil Prices to Affect Price Cap Revision in Two Weeks

As concerns grow over the prolonged situation in the Middle East, on the 16th, employees at the dealing room of Hana Bank’s Seoul headquarters were monitoring the stock market and exchange rates as the KOSPI started by recovering the 5500 level. On that day, the KOSPI opened at 5510.82, up 23.58 points (0.43%) from the previous trading day. March 16, 2026, Photo by Jo Yongjun

The KRW-USD exchange rate surpassed 1,500 won during intraday trading for the first time since the financial crisis, while international oil prices have climbed back to the high 90-dollar range per barrel, emerging as new variables in the stabilization of domestic petroleum prices. Although gasoline prices at gas stations nationwide have continued to decline for four consecutive days following the implementation of the petroleum price cap system, the decrease has not been significant, leading to criticism that consumers feel only limited relief.

On March 16, in the Seoul foreign exchange market, the KRW-USD exchange rate opened at 1,501.0 won, surpassing the 1,500 won mark during intraday trading. This is the first time since March 2009, during the financial crisis, that the exchange rate has exceeded 1,500 won in intraday trading during a week. Subsequently, as authorities became wary of intervention and exporters began selling dollars, the exchange rate pared gains and dropped to the 1,493 won level at one point in the morning.

Recently, heightened tensions in the Middle East have also pushed international oil prices back up to the high 90-dollar-per-barrel range. Brent crude and West Texas Intermediate (WTI) have recently been trading around 98 dollars per barrel, while Dubai crude is trading above 120 dollars. This is due to escalating military conflict between the United States and Iran, and the possibility of Iran blocking the Strait of Hormuz, both of which are raising concerns over potential disruptions in oil supply.

A sudden rise in the exchange rate and international oil prices could become variables that impact future petroleum price policies. Since crude oil is traded in dollars, an increase in the exchange rate raises import costs for refiners, while rising international oil prices can also put upward pressure on refining costs and supply prices.

Domestic fuel prices have continued a gradual downward trend since the implementation of the petroleum price cap system. According to Opinet, the Korea National Oil Corporation's oil price information system, as of the morning of this day, the nationwide average retail gasoline price at gas stations was 1,836.54 won per liter, down by 3.55 won from the previous day. The price of diesel was 1,836.23 won per liter, down by 4.94 won.

On the first day of the implementation of the maximum oil price system on the 13th, Minister of Trade, Industry and Energy Jungkwan Kim visited a gas station in Mapo, Seoul, to check quantities and inspect the site with officials from the Korea Petroleum Quality and Distribution Authority. 2026.03.13 Photo by Dongju Yoon

Looking at price trends, on March 13, when the petroleum price cap system was introduced, the nationwide average gasoline price was 1,893.3 won per liter, and diesel was 1,911.1 won. On March 14, gasoline fell to 1,845.31 won and diesel to 1,847.91 won; on March 15, gasoline was 1,840.09 won and diesel was 1,841.17 won, continuing the decline for four consecutive days.

However, the limited extent of the price drop has led to the assessment that consumers feel only a modest impact. In some regions, gasoline prices are still hovering around 1,900 won per liter, making it difficult for many to perceive a significant reduction in price burden.

A government official stated, "Although there is a downward trend in prices, it may not be sufficient for the public to feel a meaningful difference. While government measures have somewhat slowed the pace of increases, the impact of rising international oil prices makes it difficult for consumers to experience a strong sense of price stabilization."

This is because retail gasoline prices at gas stations are influenced not only by refiners' supply prices but also by inventory levels, regional competition structures, and distribution costs at various stages. The government has set upper limits on refiners' supply prices to curb the speed of price increases, but there may be a time lag before these are fully reflected in actual retail prices at gas stations.

The next issue is the timing of the next price cap revision. The government reviews and adjusts the price cap every two weeks, taking into account market conditions such as international oil prices, exchange rates, and refiners' supply prices. If the upward trend in international oil prices continues, it could become a burden in the process of future price cap adjustments.

The government plans to monitor the operation of the price cap system by comprehensively considering international oil prices, exchange rates, and refiners' supply prices. A government official said, "We will continue to monitor international oil price fluctuations and market conditions and consider additional response measures if necessary."

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