Oil prices are displayed at a gas station in Seoul, Sunday. Yonhap
Kuwait's declaration of force majeure on crude oil shipments will have a limited impact on Korea's oil supply as the country has already been working to cope with the impact of the Strait of Hormuz blockade, an industry ministry official said Tuesday.
Yang Ghi-wuk, deputy minister for trade, industry and resource security, made the remarks in a regular briefing on the country's energy supply, explaining that the country has secured alternative crude supplies to stabilize the domestic fuel market amid the ongoing crisis in the Middle East
Kuwait is known to have begun notifying Korean oil refineries of its decision, but the country will face a limited impact from the move as imports of Kuwait crude shipments have already been disrupted with the de facto closure of the critical Middle Eastern oil export route, Yang said.
Force majeure is a contract clause that excuses a party from performing its obligations when unforeseeable circumstances beyond its control make adherence to its obligations impossible.
Seoul has secured alternative oil supplies amounting to 70 million barrels for May, which account for about 80 percent of the country's usual monthly import level, and is continuing efforts to secure supplies for June, according to the industry ministry.
Regarding concerns over the fuel price cap system, the deputy minister said the government will consider various factors, such as the global price trend, with lingering uncertainties over the possible end of the war between the United States and Iran, and people's livelihoods, when adjusting the price ceilings later this week.
Korea introduced the price ceiling system in mid-March in a bid to rein in domestic fuel prices that surged after the outbreak of the Iran war. The government has been adjusting the maximum prices of gasoline, diesel and kerosene products every two weeks.
Recently, some have claimed the government is excessively controlling fuel prices, arguing that the system is leading to an increase in fuel product consumption despite supply disruptions. Critics claimed this is burdening public finances.
The average gasoline price in Korea went up 18.4 percent as of Tuesday, compared with the average price tallied on Feb. 27, a day before the Iran war broke out, while the average diesel price rose 25 percent over the same period.
Source: Korea Times News
