Iran war triggers unprecedented gasoline price cap in Korea

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Iran war triggers unprecedented gasoline price cap in Korea

Published: 06 Mar. 2026, 00:00

Audio report: written by reporters, read by AI

Vehicles line up to refuel at the Mannam Square service area gas station along the Gyeongbu Expressway in Seocho District, Seoul, on March 4, as international oil prices rise following the war between the United States and Iran. [NEWS1]

A sharp rise in domestic fuel prices following tensions in the Middle East has prompted the government to consider an unprecedented intervention in the gasoline market.

President Lee Jae Myung on Thursday ordered officials to prepare a “maximum price designation system” for gasoline. The measure would allow the government to set a ceiling on retail fuel prices if authorities determine that excessive increases are occurring.

Lee said the government must respond firmly to attempts to hoard fuel or exploit the crisis through unreasonable profits. “Even if people say money can be a devil, this seems excessive,” he said, criticizing what he described as opportunistic price increases.

Deputy Prime Minister and Finance Minister Koo Yun-cheol also warned against sharp price hikes. He said that considering the usual time lag between international oil prices and domestic fuel costs, it is too early for global price movements to significantly affect Korea’s retail market. Raising prices excessively under such conditions amounts to profiteering that harms ordinary people’s livelihoods, he added.

Fuel prices have indeed climbed quickly. As of 4 p.m. Thursday, the average price of gasoline at stations nationwide stood at 1,834.32 won per liter ($6.94 per gallon), up 56.84 won, or 3.2 percent, from the previous day. The figure marks the highest level in three years and seven months.

Domestic gasoline prices usually follow refined product prices in the Singapore market with a lag of two to three weeks. Although international oil prices have risen and currency volatility has increased pressure on import costs, the recent pace of price increases appears excessive.

The government is right to crack down on market disruptions such as hoarding, collusion or other practices that exploit a crisis, analysts say.

At the same time, however, direct government regulation of market prices should be approached with caution.

The Petroleum and Alternative Fuel Business Act provides a legal basis for the government to designate maximum fuel prices in exceptional circumstances. Yet there are few precedents for nationwide regulation of retail gasoline prices at service stations.

Lee appeared aware of these concerns when he said that if a uniform national ceiling proves difficult, authorities should explore practical alternatives such as applying the policy by region or by fuel type.

The debate comes shortly after the government issued a rare order requiring flour producers suspected of collusion to reset prices. Although the Monopoly Regulation and Fair Trade Act contains such provisions, they have not been invoked in about two decades.

The long period of nonuse reflects the government’s reluctance to intervene directly in market pricing.

Having a legal basis for intervention does not automatically make such actions desirable. Regulation based solely on legal authority is not always the best policy response, nor does it necessarily reflect sound governance under the rule of law.

Authorities should therefore carefully distinguish between what the government must do and what should be left to the market.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.