South Korea Imposes Limit On Fuel Price Hike To Curb Iran War Shock

South Korea said Thursday a fuel price cap would take effect from midnight to mitigate pressure on the country’s energy supply during the Iran war.

The country is heavily reliant on energy imports, including shipments through the Strait of Hormuz, and has said it will try to find alternatives to secure supplies.

It marks the first such measure introduced in Asia’s fourth-largest economy since 1997.

“The government has decided to introduce institutional measures aimed at curbing the recent surge in domestic oil prices triggered by the situation in the Middle East,” the energy ministry said in a statement.

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The price ceiling applies to supply prices charged by refiners to distributors and gas stations, not retail prices charged to customers at gas stations, the ministry said.

“The initial maximum prices… have been set at 1,724 won (US$1.70) per litre for regular gasoline, 1,713 won per litre for automotive diesel,” it said.

The capped prices are below the average fuel prices submitted by refiners on Wednesday, the ministry added.

The set maximum prices will remain in place for two weeks, after which they will be reset after “taking into account internal and external situations regarding oil prices”, officials said.

Seoul said last week it had struck a deal to ship around four million barrels of crude from the United Arab Emirates to bolster supplies.

The country has said it has oil reserves equivalent to about seven months of consumption.