Trade Minister Kim Jung-kwan said the government's oil price cap is "showing immediate effects" and that refiners' margins could be partially considered when compensating their losses.
Kim also announced that export restrictions would be extended to naphtha, following similar measures on gasoline, diesel, and kerosene, to address supply disruptions facing the petrochemical industry.
Speaking to reporters after a joint ministerial inspection meeting and oil market review session at Korea Trade Insurance Corporation in Seoul on Monday—the first day of the price cap implementation—Kim said gas stations and refiners agreed to cut prices immediately given the extraordinary circumstances.
"Normally it takes two to three days for price cap effects to appear because stations have existing inventory, but this time they agreed to participate in price cuts right away," Kim said. "We expect company-owned stations operated by refiners to see immediate effects."
On loss compensation for refiners, Kim said the government could consider each company's margins alongside losses when calculating reimbursements. "However, we will strengthen objectivity and expertise in cost calculations to avoid windfall profit controversies like in the past," he added.
The government has committed to using fiscal resources to compensate refiners for losses incurred under the price cap. Refiners will calculate their own losses based on internal costs and submit claims, which a settlement committee of accounting and legal experts will verify before processing payments on a quarterly basis.
Regarding concerns that gas stations that purchased fuel at higher prices before the cap might face losses or pricing confusion, Kim said station prices remain subject to market principles. "Prices will be determined by mixing supplies received after implementation with those purchased at higher prices beforehand," he explained.
The government also announced support measures for petrochemical companies facing supply disruptions due to the Strait of Hormuz blockade. Yeochun NCC declared force majeure on the 4th, notifying major customers of potential supply delays. LG Chem, Lotte Chemical, and Hanwha Solutions have also notified customers of possible force majeure situations.
"We have decided to restrict exports of naphtha currently being shipped overseas," Kim said. "We will utilize strategic reserves and discuss with the industry to provide support for costs incurred when importing naphtha."
