South Korea Caps Domestic Fuel Prices Amid Middle East Crisis

South Korea will cap domestic fuel prices to combat rising energy costs due to the Middle East conflict. The cap will help cushion the economy, which heavily relies on imported energy. Prices will be adjusted biweekly, based on global oil prices and other factors, with financial support for refiners.

The South Korean government announced plans to cap domestic fuel prices starting Friday to mitigate the rising energy costs resulting from the ongoing Middle East conflict.

This measure is a strategic response to cushion South Korea's economy, Asia's fourth-largest, which largely depends on imported energy due to its limited natural resources. The set maximum wholesale price for gasoline will be 1,724 won per liter, significantly lower than the previous level of 1,833 won. Adjustments to these prices will occur every two weeks based on global oil prices and other economic factors.

The Finance Minister, Koo Yun-cheol, stated that this initiative aims to alleviate the burden on consumers while preventing exploitation of the crisis through excessive price hikes. With a reliance on the Middle East for approximately 70% of its oil and 20% of its LNG, South Korea is also mandating refiners to maintain a minimum stock release and proposing financial support for potential losses due to the price cap.

(With inputs from agencies.)