International oil prices have spiked amid the Middle East war, pushing automotive diesel prices in Europe up 32% in a single month, while South Korea's increase stayed at around 8%, data showed.
The Korean government has intervened aggressively by implementing a petroleum price ceiling system for the first time in 30 years. However, with the Strait of Hormuz blockade expected to be prolonged, experts say a range of policy measures must be deployed in parallel.
According to the Korea National Oil Corporation's Opinet price information system and the refining industry on the 8th, the average automotive diesel price across 20 European countries with publicly available data among Organisation for Economic Co-operation and Development (OECD) members stood at 3,538.7 won per liter in the fourth week of last month.
That represented an increase of 852.71 won from 2,685.99 won in the first week of the same month, a rise of 31.75%. South Korea, by contrast, saw only a 135.4 won increase over the same period, from 1,680.4 won to 1,815.8 won, with a rise of just 8.05% — roughly one-quarter of Europe's rate.
By country, the Netherlands recorded the highest price at 4,278.1 won, while Denmark reached 4,118.3 won and Finland 4,009.4 won, with some Northern European nations already surpassing the 4,000-won mark. Even relatively cheaper countries such as Slovakia (2,718.9 won) and Hungary (2,888.1 won) maintained prices 900 to 1,000 won higher than Korea's.
Premium gasoline showed a similar trend. The average price across 19 European countries was 3,225.67 won, roughly 1.5 times higher than Korea's 2,112 won. The European increase was 470.86 won (17.09%), from 2,754.81 won to 3,225.67 won, far exceeding Korea's 139.3 won (7.06%) rise.
The widening gap is attributed to the government's direct price intervention. Korea introduced the petroleum price ceiling system on the 13th of last month, marking the first price controls since oil price liberalization in 1997. In the third week immediately after implementation, the national average gasoline price at gas stations fell 72.3 won from the previous week to 1,829.3 won.
Japan also adopted price-suppression measures, providing a subsidy of 30.2 yen per liter starting the 19th of last month. As a result, Japan's diesel price in the fourth week stood at 1,558.7 won and premium gasoline at 1,769.10 won, both below Korean levels.
However, concerns are rising over the sustainability of price controls. Since the second round of the price ceiling system took effect, domestic oil prices have resumed their upward trend, and Seoul's average gasoline price has exceeded 2,000 won for the first time in approximately three years and eight months since July 2022.
The Korea Institute for Industrial Economics and Trade acknowledged the necessity of the price ceiling system in a recent report but recommended limited use. The institute argued that prolonged price caps could increase fiscal burdens and shrink market supply, distorting the market. It called for a combination of policy tools including fuel tax cuts, direct support for vulnerable groups, and diversification of import sources.
"Korea's price increase has been markedly lower than in other countries thanks to the price ceiling system and refiners' domestic supply efforts," an industry official said. "Still, it is urgent to prepare medium- to long-term measures such as conserving domestic consumption and securing additional supply routes in case the situation becomes prolonged."