Rushed to Gas Stations After 'Oil Prices Plunge 30%'... "Still Over 2,000 Won?"

Price display board is placed at a gas station in downtown Seoul. June 18, 2026, Yonhap News Agency

Although international oil prices have plummeted following the peace agreement between the United States and Iran, domestic gasoline prices at gas stations show no signs of falling. This is because it typically takes two to three weeks for changes in international oil prices to be reflected in domestic retail prices, and variables such as exchange rates, the maximum price policy, and the potential imposition of transit fees for the Strait of Hormuz remain in play.

According to Opinet, the oil price information system of Korea National Oil Corporation, the price of Dubai crude oil in the Singapore spot market—which South Korea mainly imports—fell by 30.9% over one month, from USD 106.60 per barrel on May 20 to USD 73.61 per barrel on June 19. At one point during the Middle East war, prices soared to USD 170 per barrel (closing price), but they have now largely returned to pre-war levels (around USD 70 per barrel).

In contrast, the average retail price of gasoline at domestic gas stations remained almost unchanged, moving from KRW 2,011 in the third week of May to KRW 2,009 in the third week of June. It takes about one week for changes in international oil prices to be reflected in refinery supply prices, and an additional one to two weeks for these changes to be reflected in gas station retail prices. Even though international oil prices have recently declined, this means the final consumer price may not be adjusted until early to mid-July, about three weeks later at the earliest.

The government's implementation of the maximum price policy has also had a significant impact. If international oil price spikes had been fully reflected, domestic prices would have risen more sharply. However, since the government has been controlling this through policy, the recent sharp decline in international oil prices is not fully reflected in domestic prices either.

Since late February, after the outbreak of war in the Middle East, domestic gasoline and diesel prices have consistently remained around the high level of KRW 2,000 per liter through April and beyond.

The memorandum of understanding (MOU) for ending hostilities between the United States and Iran includes a provision that no fees will be charged to ships applying to pass through the Strait of Hormuz for the next 60 days. However, it has been reported that Iran plans to charge an 'insurance fee'—effectively a kind of transit fee—for ships passing through the strait. If such transit fees are implemented, the positive impact of falling international oil prices could be offset. As a result, there are concerns that if the downward trend in international oil prices slows, the extent of further decreases in domestic gasoline prices may be limited.

This content was produced with the assistance of AI translation services.