Gov't, DP agree to abolish oil industry's 'post-settlement system' as gas prices skyrocket

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Gov't, DP agree to abolish oil industry's 'post-settlement system' as gas prices skyrocket

Published: 06 Apr. 2026, 18:28

Audio report: written by reporters, read by AI

A signboard outside a gas station on Jeju Island shows that the price of gasoline had exceeded 2,000 won per liter ($5 per US gallon) on April 6. [YONHAP]

The government and the ruling Democratic Party (DP) agreed Monday to abolish the oil industry's so-called post-settlement system, a pricing practice that gas station operators blame for rising prices because they have been forced to buy fuel without knowing its final cost.

Rep. Ahn Do-geol, a DP official leading the party’s response to the Middle East conflict, announced the measures after a meeting with relevant ministries at the National Assembly in Yeouido, western Seoul.

Under the post-settlement system, refiners supply petroleum products to gas stations first and settle prices later based on fluctuations in international benchmark prices after a set period.

Gas station operators have long complained that they are required to make purchases without knowing the price of oil, which has soared since the beginning of the ongoing hostilities in the Persian Gulf.

Ahn said the settlement period, which previously took about a month, will be shortened to within one week.

The plan also includes lowering the exclusive dealing ratio, which had reached as high as 100 percent, to around 60 percent. This would allow gas stations to source fuel from multiple suppliers, potentially further reducing their costs.

Cargo ships idle in the Persian Gulf near the Strait of Hormuz on March 11. [REUTERS/YONHAP]

A final announcement is expected in the second week of April.

The move comes as Seoul scrambles to stabilize energy supplies, with officials also pledging to mobilize all available diplomatic resources to secure alternative sources of crude.

Speaking to reporters, Ahn added that securing alternative supplies of crude is the party and government’s most urgent priority.

“We will devote our full diplomatic efforts to securing crude oil from Saudi Arabia, Oman and Algeria, which are three countries that have alternative supply routes,” he said.

To that end, the government and the party are pushing to deploy five Korean-flagged vessels to the Red Sea region and Saudi Arabia. They also plan to support making government stockpiles of petroleum available should private refiners secure alternative shipments from countries unaffected by the war.

Rep. Han Jeong-ae, left, and Rep. Ahn Do-geo take part in the first meeting of the ruling Democratic Party's special committee on economic responses to the Middle East conflict at the National Assembly in Yeouido, western Seoul, on March 10. [YONHAP]

Support measures for exporters hit by supply disruptions were also discussed at Monday’s meeting.

To encourage firms to secure alternative supplies of petrochemical feedstocks such as naphtha, which are heavily dependent on the Middle East, the government plans to subsidize the price gap for imports from other countries.

Ahn noted that a budget of 470 billion won ($312.7 million) has already been allocated to cover 50 percent of the cost difference, but industry players are calling for the support rate to be raised to 80 percent.

“We will actively review this during the National Assembly’s budget deliberations,” he said.

He added that 25 billion won in emergency vouchers has been included in a supplementary budget to support logistics costs for exporters affected by the crisis.

Trade insurance coverage will be expanded by an additional 2 trillion won from the existing 3.9 trillion won, alongside a 50 percent reduction in guarantee fees, a doubling of loan guarantee limits and extensions of existing guarantees.

As the Iran war rages without a clear end in sight, fuel prices at gas stations across Korea have continued to rise despite a government cap on prices that was implemented 11 days earlier.

According to Opinet, the state-run fuel price information system, the nationwide average price of gasoline stood at 1,953.3 won per liter ($4.90 per gallon) as of 9 a.m. on Monday, up 4.9 won from the previous day. Diesel prices rose by 4.7 won over the same period to 1,943.9 won per liter.

In Seoul, where fuel prices are the highest in the country, the upward trend has also persisted, with gasoline prices nearing 2,000 won per liter. The average gasoline price in the capital reached 1,987.2 won per liter, up 3.4 won from a day earlier, while diesel prices climbed 4.6 won to 1,965.6 won.

According to the civic group Energy & Petroleum Market Watch, 97.8 percent of the country’s 10,319 gas stations had raised gasoline prices as of 6 a.m. on Monday, while 98.2 percent of 10,129 stations had increased diesel prices.

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.
BY YU SUNG-KUK, KIM JI-HYE [[email protected]]