South Korea's Fuel Prices Fall, Impact Only Felt in 2-3 Weeks

A motorist fills up at a gas station in Seoul, South Korea. Average fuel prices in the country have started to fall as global crude prices weaken. (Photo: Yonhap.)

JAKARTA - Gasoline prices in South Korea have dropped again after for the first time in almost two months breaking below 2,000 won per liter. However, the price drop is expected to not be immediately felt by consumers because many gas stations (SPBU) are still selling stocks purchased when prices were higher.

Yonhap, quoted on Sunday, June 28, reported data from Korea National Oil Corp. (KNOC) showed the average price of gasoline at South Korean gas stations on Sunday at 09.00 local time reached 1,991.1 won per liter. The figure fell 5 won compared to the average of the previous day.

This is the second consecutive day that gasoline prices have remained below 2,000 won per liter. The price of diesel also fell to an average of 1,982.3 won per liter.

The decline in fuel prices occurred after the South Korean government cut the maximum price limit for fuel to adjust to the decline in world crude oil prices.

Starting Saturday, the maximum price of regular gasoline, diesel, and kerosene supplied by domestic oil refineries to gas stations will be cut by 150 won. With this policy, the maximum price of regular gasoline will be 1,784 won per liter, diesel 1,773 won per liter, and kerosene 1,380 won per liter.

World oil prices have also continued to weaken. Dubai crude prices have fallen 34.3 percent in the past month, from 98 US dollars per barrel on May 26 to 64.4 US dollars per barrel on Thursday.

However, the impact of the decline is expected to be fully felt by consumers in the next two to three weeks. The reason is that most gas stations are still spending fuel supplies purchased when prices were still higher.

"Because each gas station has different inventories, prices are expected to gradually fall by about 50 won per week in the next two to three weeks," an industry official said.

Even though prices continue to decline, officials estimate that fuel prices in South Korea will be difficult to return to the level before the outbreak of war between the United States and Iran. The weakening won exchange rate and the increase in the price of petroleum products in the global market are still restraining factors.

KNOC data showed that in the fourth week of February, before the conflict broke out, the average price of gasoline at South Korean gas stations was at the level of 1,691.3 won per liter.