6th Oil Price Cap Extended Amid Middle East Ceasefire Variables

Following the ceasefire agreement between the United States and Iran, the South Korean government has decided to extend the currently implemented 6th oil price cap.

Yang Gi-wook, Deputy Minister for Industrial Policy at the Ministry of Trade, Industry and Energy, stated during a briefing at the Government Complex Sejong today (June 18), "We will maintain the current 6th price cap," adding, "We plan to determine the 7th price cap after monitoring progress on the ceasefire, such as the resumption of passage through the Strait of Hormuz, and the situation regarding international oil prices."

This decision reflects a cautious approach, allowing for flexibility before setting a new price cap, as the memorandum of understanding (MOU) between the U.S. and Iran could introduce various variables.

While the Ministry did not specify the duration of the extension, it clarified that the cap would not be maintained indefinitely.

The government is expected to make a decision after observing the situation in the Middle East through this weekend and early next week.

"We extended the cap because we believe we will be able to assess progress on the ceasefire by the end of this weekend," said Deputy Minister Yang.

Accordingly, oil prices will remain at 1,934 won per liter for gasoline, 1,923 won for diesel, and 1,530 won for kerosene.

The government has maintained the same price levels since the 2nd price cap.

Since March 13, following the outbreak of the Middle East war, the government has announced oil price caps on a bi-weekly basis, but extended the adjustment cycle to four weeks starting from the 6th round.

If the situation stabilizes, the government may consider ending the price cap system.

Previously, the Ministry of Trade, Industry and Energy explained that for an exit strategy, conditions such as the end of the Middle East war, the normalization of the Strait of Hormuz, and the stabilization of international oil prices in the 90-dollar range must be met to terminate the system.

"It is too early to predict the termination date," Deputy Minister Yang said today. "The resumption of passage through the Strait of Hormuz must be the top priority. Once that condition is met, we will make a decision after comprehensively reviewing the impact on public livelihood, fiscal burdens, and domestic oil price levels after the lifting of the cap."

Meanwhile, regarding the export restrictions on naphtha and petroleum products, he stated, "The sunset periods for these restrictions vary slightly, but we will lift them without delay after reviewing the supply and demand situation for naphtha and the conditions in the Strait of Hormuz."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.