Government Freezes Sixth Maximum Oil Price... Gasoline at 1,934 Won, Diesel at 1,923 Won

Adjustment Cycle Extended from Two to Four Weeks
Government: "Immediate Price Adjustment if Situation Changes in Hormuz"

Yonhap News Agency

The government has extended the maximum oil price cap once again, taking into account the inflationary pressures stemming from the prolonged war in the Middle East. With international oil prices hovering around $100 per barrel, the government has chosen to maintain the price caps on gasoline and diesel, but has increased the adjustment cycle from every two weeks to every four weeks, prioritizing market stability.

The Ministry of Trade, Industry and Energy announced on May 21 that the sixth maximum oil price, which will take effect from midnight on May 22, will remain unchanged from the fifth round. As a result, the maximum prices per liter will remain at 1,934 won for gasoline, 1,923 won for diesel, and 1,530 won for kerosene.

The ministry explained, "Neither the U.S.-Iran peace negotiations nor the U.S.-China summit have produced any significant progress, and as a result, international oil prices are continuing to fluctuate in the $100 per barrel range. We decided to freeze the maximum price in order to prioritize price stability and the livelihoods of the public."

In fact, the international price of Brent crude oil has recently been trading in the range of $105 to $112 per barrel. Yang Kiuk, policy chief at the ministry's Office of Industrial Resources and Security, also stated during the daily briefing of the Middle East War Response Headquarters that "Since the designation of the fifth maximum price, there have been no significant changes in the situation in the Middle East or in international oil prices," and added, "While international oil prices can move more than 5% in a single day, overall, they are in a sideways trend."

The government believes that cumulative factors for price increases still remain even after the implementation of the price cap system. Yang noted, "For gasoline, the cumulative upward pressure is in the mid-to-high 200 won range," and also stated that "Diesel and kerosene are likewise facing continued upward pressure."

However, domestic retail prices have remained relatively stable. As of May 21, the national average retail price at gas stations stood at 2,011 won for gasoline and 2,005 won for diesel. The government explained that since the introduction of the price cap system, 96% of gas stations nationwide have shown no price changes.

The trend of declining demand has also continued. According to the ministry, sales of gasoline in May decreased by 2% year-on-year, while diesel sales were down by 6%. Accumulated over the past 10 weeks since the introduction of the price cap, gasoline sales were down by 3% and diesel sales by 8%.

From this sixth measure onward, the government will extend the price cap adjustment cycle from every two weeks to every four weeks. Yang explained, "Unlike the initial phase of the war, recent volatility in international oil prices has been limited, and domestic prices remain stable. This measure is intended to improve predictability for gas station inventory management and for the economic activities of the public."

He added, "Since the fourth round, there have not been any significant actual changes, so we determined that it is necessary to reconsider whether adjusting the maximum price every two weeks is truly effective for market stability."

Nevertheless, the government maintains that in the event of changes in the Middle East situation, such as the reopening of the Strait of Hormuz, the maximum price can be adjusted immediately, regardless of the regular adjustment cycle.

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