South Korea Holds Gasoline Price Cap at ₩1,784/Litre for Four Weeks as Oil Tops $100/Barrel Amid Middle East Tension

The Quick Take

• South Korea's government froze the 11th petroleum maximum price at gasoline ₩1,784/L, diesel ₩1,773/L, and kerosene ₩1,380/L for four weeks.
• Middle East tensions including Iranian attacks on Hormuz Strait vessels and Houthi strikes on Saudi facilities have kept Brent and Dubai crude above $100/barrel.
• Korean refiners are requesting export restrictions be eased as domestic gasoline and diesel consumption declines despite the price cap.

South Korea's Ministry of Trade, Industry and Energy has frozen petroleum product maximum prices for the eleventh consecutive review cycle, maintaining the ₩1,784/L gasoline cap despite international crude oil remaining above $100/barrel — a level not seen since 2022. The decision reflects the government's commitment to shielding domestic consumers from the full pass-through of elevated crude costs, at the expense of refinery margins. Korea's reliance on Middle Eastern crude — over 70% of imports — makes it uniquely exposed to Hormuz Strait and Red Sea disruption risk.

Korean refiners including SK Innovation, S-Oil, and GS Caltex are facing a compressed margin environment: crude costs remain elevated while domestic selling prices are capped by government order. The request to ease petroleum export restrictions signals that refiners see better profitability from selling into regional spot markets — Singapore, Japan, and Southeast Asia — than from domestic supply obligations at regulated prices. If the government maintains export restrictions alongside the price cap, refinery utilisation and investment decisions will come under pressure in Q4.

The key forward signal is any change to the 12th price cap review, due in four weeks, which will incorporate updated Brent/Dubai crude averages and domestic consumption data. Middle East military escalation is the macro variable — any closure of the Hormuz Strait or expanded Houthi attacks on Saudi oil infrastructure would push crude above $110/barrel, making the current cap increasingly fiscally costly for Korea. Currency markets should monitor the Korean won, which tends to weaken against geopolitical oil shocks given Korea's net energy import position.

Synthesized from 2 sources.