Gas prices still above 2,000 won despite falling global oil prices

Global oil prices have entered a downward trend as the US and Iran move forward with implementing their memorandum of understanding to end the war, yet average prices at South Korean gas stations remain stubbornly above 2,000 won per liter.

According to Opinet, the oil price information system run by the Korea National Oil Corp., the national average retail price of gasoline during the third week of June — Sunday through Thursday — fell 0.7 won per liter from the previous week to 2,009.2 won. That marked a fifth consecutive week of declines, but prices have yet to dip below the 2,000 won threshold.

By region, Seoul recorded the highest average at 2,051.2 won, down 0.3 won from the previous week, while Daegu posted the lowest at 1,989.6 won, a drop of 1.0 won.

The national average retail price of diesel fell 0.7 won from the previous week to 2,004.1 won per liter.

Global oil prices had already fallen more than 11 percent after the US and Iran announced they had reached an agreement to end the war, but markets have since turned mixed. Brent crude for August delivery closed up 0.4 percent at $79.85 per barrel on the ICE Futures Exchange on Wednesday local time, while West Texas Intermediate for July delivery ended down 0.3 percent at $76.60 per barrel on the New York Mercantile Exchange. Markets appear more focused on how quickly actual crude supply will normalize than on the truce itself.

The typical two-to-three-week lag between movements in international oil prices and their reflection in domestic pump prices is also keeping the national average above the 2,000 won mark.

The government extended the sixth round of maximum oil price controls on Wednesday. Under the measure, the ceiling prices are maintained at 1,934 won per liter for gasoline, 1,923 won for diesel and 1,530 won for kerosene.

The government plans to set the seventh round of maximum prices after reviewing the progress of the end-of-war process — including the resumption of navigation through the Strait of Hormuz — alongside international oil market conditions.

President Lee Jae Myung said at a senior staff meeting he chaired at Cheong Wa Dae on Thursday afternoon that "the most urgent task right now is prices — first and foremost, prices." He added that while the maximum oil price system and preemptive price management had helped contain inflation to a considerable degree, "there is still much that needs to be looked at."