South Korea said on Thursday that a fuel price cap would take effect from midnight to ease pressure on the country’s energy supply during the ongoing conflict involving Iran.
The country, which depends heavily on imported energy, including shipments passing through the Strait of Hormuz, said it is also seeking alternative sources to secure supplies.
The measure is the first of its kind introduced in Asia’s fourth-largest economy since 1997.
“The government has decided to introduce institutional measures aimed at curbing the recent surge in domestic oil prices triggered by the situation in the Middle East,” the energy ministry said in a statement.
The price cap will apply to supply prices charged by refiners to distributors and petrol stations, rather than the retail prices paid by motorists at fuel stations, the ministry explained.
“The initial maximum prices… have been set at 1,724 won (US$1.70) per litre for regular gasoline, 1,713 won per litre for automotive diesel,” it said.
Officials noted that the capped rates are lower than the average prices submitted by refiners on Wednesday.
The ceiling will remain in place for two weeks, after which it will be reviewed and adjusted based on domestic and global oil market conditions.
Last week, Seoul said it had reached an agreement to import about four million barrels of crude oil from the United Arab Emirates to reinforce its supply.
Authorities also said the country currently holds oil reserves sufficient for roughly seven months of consumption.