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South Korea Extends Fuel Price Caps Amid Middle East Tensions

Energy Minerals · Oil Refining/Marketing · yonhap_finance · 2026-08-21

The South Korean government has decided to maintain current gasoline and diesel price caps for another four weeks to mitigate inflation and energy volatility.

What Happened

Price Cap Extension: The Ministry of Trade, Industry and Energy announced that the ninth round of fuel price caps will remain unchanged for the next four weeks. Gasoline will continue to be capped at 1,784 won per liter, while diesel remains at 1,773 won.

Rationale for Decision: The government cited ongoing geopolitical instability in the Middle East and domestic economic pressures from extreme weather as primary reasons for the extension. Despite rising global oil prices, officials prioritized stabilizing the cost of living for the public.

Market Context: Although global oil prices have climbed back toward the $90 per barrel range due to persistent U.S.-Iran tensions, the government has opted to delay its exit strategy from the price control system. The policy will remain in effect until the regional situation stabilizes.

Policy Outlook: Authorities confirmed that the 4.2 trillion won reserve fund allocated for compensating refinery losses is sufficient to support the extended policy. The government plans to monitor global supply and demand closely to manage the price cap system with flexibility.

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