South Korea is imposing a historic petroleum price cap, the first time in 30 years after oil prices jumped due to the war in Iran, The Korea Herald reported.
South Korean President Lee Jae Myung ordered “extraordinary measures” to stabilise the economy from the escalating Middle East conflict.
“As the crisis in the Middle East deepens, uncertainty at home and abroad is growing significantly,” Lee told Cabinet members, noting the heavy burden on South Korea’s trade-dependent economy.
“The government must prepare preemptive response measures with extraordinary resolve, keeping even the worst-case scenario in mind.”
Oil prices surged on March 9 as key Middle East oil producers cut output and global oil prices surpassed US$100 a barrel on Sunday.
The highlight of Lee’s strategy is the swift return of a fuel price ceiling for gasoline and diesel, a tool not used since the liberalisation of petroleum prices in 1997.
“For petroleum products whose prices have recently risen excessively, we must swiftly introduce a maximum price system and implement it boldly,” Lee said.
“Given that the burden of rising energy prices on consumer prices falls first, and most heavily, on ordinary people, we must prepare careful and effective measures.”
With roughly 70 per cent of South Korea’s crude oil passing through the now-blocked Strait of Hormuz, Lee instructed officials to identify alternative supply routes in coordination with strategic partners.
“As the situation of energy supply and price instability is serious, corresponding extraordinary measures are also necessary,” Lee said.
“We should swiftly identify alternative supply routes that do not pass through the Strait of Hormuz in cooperation with strategic partner countries.”
Lee also issued a stern warning against market manipulation.
“Illegal acts such as collusion, hoarding, and stockpiling will be strictly cracked down on,” he said, calling for sanctions equivalent to several times any illicit profits gained.
