Seoul: South Korean companies are actively seeking strategies to manage the impact of rising global oil prices as turmoil in the Middle East continues to escalate, industry sources reported Monday. In response, the government has urged efforts to stabilize domestic fuel prices.
According to Yonhap News Agency, major South Korean corporations such as Samsung Electronics Co., SK Group, Hyundai Motor, and Hanwha Group have convened emergency meetings recently. These meetings have been focused on assessing the volatility in the global energy market and devising strategies to minimize the repercussions of the Middle East crisis on their operations.
Particularly impacted are the airline and shipping sectors, which are heavily influenced by fuel prices. Korean Air Co., the country's flagship carrier, has implemented a strategy to hedge up to 50 percent of its projected annual fuel consumption. Meanwhile, HMM Co., Korea's largest shipping firm, is preparing to introduce fuel surcharges in response to the price fluctuations.
Other companies are also exploring ways to address the rising costs of raw materials and the volatility in foreign exchange rates. The ongoing Middle East crisis is raising concerns about a potential global economic slowdown, which could lead to stagflation in South Korea's economy.
A study conducted by the Hyundai Research Institute indicated that if the average oil price this year remains around US$100 per barrel, South Korea's economic growth rate in 2026 might decline by 0.3 percentage points.
As of 7:26 a.m., Brent crude oil prices, the global oil benchmark, reached $107.54 per barrel, marking a 14.85 percent increase from the previous day and surpassing the $100 per barrel level, a critical psychological threshold.
In efforts to stabilize domestic fuel prices, Industry Minister Kim Jung-kwan urged major oil refiners to avoid excessive price hikes, as announced by his office. "We ask that transparent and fair petroleum pricing be implemented so that the burden of rising international oil prices due to the recent situation in the Middle East is not unilaterally or excessively passed on to consumers," Kim stated during a meeting with representatives from the oil refinery industry and relevant authorities in Seoul, according to the Ministry of Trade, Industry and Resources.
The meeting was attended by officials from SK Energy Co., GS Caltex Corp., S-Oil Corp., and HD Hyundai Oil Bank Co. Kim noted that domestic oil prices typically reflect global price changes with a two-week delay, but prices in South Korea have risen sharply following recent airstrikes by the United States and Israel against Iran.
The minister warned that any attempts to exploit the rising international oil prices to undermine efforts to stabilize citizens' livelihoods would be met with strict responses.
In Seoul, the average gasoline price surpassed 1,900 won (US$1.28) per liter for the first time in nearly four years on Friday and climbed further to 1,947.4 won as of 9 a.m., according to data from the Korea National Oil Corp. The Korea Oil Station Association attributed the recent surge in domestic fuel prices primarily to supply price hikes by oil refineries.
The government, anticipating potential resource challenges, issued a precautionary alert last week to proactively address market volatility. Efforts are underway to secure additional oil supplies from non-Middle Eastern regions and to develop a comprehensive plan for a potential release of oil reserves.
Furthermore, the government is intensifying its crackdown on unfair market practices in the energy sector and is considering implementing a price cap system for oil, a measure not used in nearly 30 years.
Nonetheless, some officials within the oil refinery sector expressed concerns about the proposed price ceiling. "Oil refining companies all agree on the need to cooperate with measures to stabilize oil prices, but we are in a difficult situation as it is still unclear how the price cap will be set," one industry official stated anonymously. Another official cautioned that resorting to price control measures from the outset might constrain future policy options, noting that alternative measures such as tax policy and oil reserve releases could be explored first.