Dubai crude oil prices have stabilized at $65.13 per barrel, returning to levels seen before the Middle East conflict, while domestic gas prices have also dropped to around 1,800 won. As oil prices stabilize, the likelihood of the government ending its oil price cap policy is increasing.
As of July 7, the national average prices were reported at 1,895 won per liter for gasoline, 1,882 won for diesel, and 1,135.16 won for LPG. Although these prices are higher than the levels recorded immediately after the outbreak of the war on March 1—1,747 won for gasoline, 1,680 won for diesel, and 1,011 won for LPG—the return of international oil prices to pre-war levels has diminished the necessity for maintaining the price cap.
The focus of the policy is shifting from price control to loss compensation. The Ministry of Trade, Industry and Energy has begun the process of compensating refiners for losses incurred under the price cap policy. The four major refiners—SK Energy, GS Caltex, HD Hyundai Oilbank, and S-Oil—are reportedly assessing their losses through accounting firms. Minister of Trade, Industry and Energy Kim Jeong-kwan stated at a press conference last month that actual compensation is expected to take place in the fourth quarter, indicating that loss assessments will be completed within this year.
The first period for loss assessment covers March 13, when the price cap was implemented, to June 30. The government is accepting initial loss claims until the end of August. Previously, the government announced regulations for compensating refiners, outlining cost assessment criteria that include crude oil import costs, production and sales costs, and other related expenses.
Crude oil import costs encompass the purchase price of crude oil and other petroleum products, transportation fees, insurance, and ancillary costs. Production and sales costs include depreciation, labor costs, fuel costs, and domestic distribution expenses.
However, the criteria for 'other related expenses' are not clearly defined, which may lead to prolonged discussions regarding this category. The government plans to review cost assessments, margin determinations, verification of financial support application documents, and decisions on whether to provide support and the amount through a compensation committee.
Meanwhile, the four major refiners were recently indicted for allegedly colluding to inflate oil prices following the U.S.-Iran conflict.
* This article has been translated by AI.
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