President Lee Jae Myung chaired an "Emergency Economic Review Meeting on the Middle East Situation" starting at 11:00 a.m. for approximately one and a half hours on March 9.

 

The meeting was attended by the Deputy Prime Minister for Economic Affairs along with vice ministers and ministers from 11 government ministries and agencies. Minister of Economy and Finance Koo Yoon-cheol reported on "Assessment of Real Economy Impacts from the Middle East Situation and Whole-of-Government Response Measures"; Minister of Trade, Industry and Energy Kim Jeong-gwan reported on "Oil and Gas Supply Stabilization Measures"; and Financial Services Commission Chairman Lee Eok-won reported on "Financial Market Assessment and Response Measures." These presentations were followed by in-depth discussions held in a solemn atmosphere.

 

 

Regarding domestic petroleum product prices, gasoline stood at 1,889 won and diesel at 1,910 won as of March 7 — a significant increase even though supplies purchased after the Middle East situation arose have not yet arrived domestically. Concrete and substantive discussions were held on the causes of and responses to these sharp price increases.

 

The government is paying particular attention to the asymmetric pricing behavior of refiners and gas stations — raising prices quickly but lowering them slowly.

 

Accordingly, the meeting included discussions on specific measures for implementing a maximum price system to prevent abnormal petroleum pricing and to ensure price predictability. The President instructed that this be pursued as swiftly as possible.

 

The Ministry of Trade, Industry and Energy will expedite related procedures — including issuing the necessary administrative notices — under the Petroleum Business Act, so that the maximum price system can be implemented within this week. Details of the maximum price system will be announced separately by the Ministry.

 

To ensure effective implementation, the Fair Trade Commission, National Tax Service, and other relevant agencies will closely examine whether any competition-restricting factors exist in the market, and whether any market-distorting or illegal activities — such as price-fixing or tax evasion — are occurring. Relevant agencies will actively conduct investigations into refinery collusion and gas station pricing, tax audits, and on-site inspections to detect counterfeit petroleum products.

 

The President also directed a comprehensive and detailed review of measures to ease the burden on economic actors from rising fuel prices, including expanding fuel tax cuts and providing direct support to fuel consumers.

 

The government also reviewed supply contingency plans for oil and gas across various scenarios, including worst-case situations. Daily crude oil imports affected by a potential Strait of Hormuz blockade amount to approximately 1.7 million barrels. South Korea currently holds strategic petroleum reserves of 190 million barrels — sufficient for 208 days by IEA standards.

 

Nevertheless, the government is preparing for scenarios in which the Middle East situation is prolonged. The 20 million barrels jointly stockpiled with oil-producing countries can be secured by exercising pre-emptive purchase rights. Production from the Korea National Oil Corporation's overseas operations can also be redirected domestically. The public and private sectors will work together to secure alternative supply sources that do not rely on Hormuz shipments.

 

Volumes that do not require passage through the Strait of Hormuz will be secured through countries with which Korea maintains strategic cooperative relationships. Over the medium to long term, crude oil import sources will be diversified beyond the Middle East to prevent supply disruptions even if the situation is prolonged.

 

In the case of gas, the Middle East accounts for approximately 14% of this year's planned import volume. While disruptions of roughly 5 million tons from Qatar are anticipated, the Korea Gas Corporation and others are expected to be able to secure replacement volumes, making supply disruptions unlikely.

 

The government will mobilize all available means to stabilize oil and gas supply and pricing.

Regarding financial markets — which have seen sharply increased volatility since the outbreak of the Middle East situation — the President called on ministries to remain at the highest level of vigilance and to focus all efforts on market stabilization. He also noted that this crisis could serve as an opportunity to consolidate a market bottom, and urged accelerated efforts toward structural reform of the capital markets to build greater resilience against shocks.

 

The government recognizes that recent financial market indicators — including stock prices and exchange rates — have deviated excessively from domestic economic fundamentals, driven in part by concerns over a prolonged Middle East situation. The government is conducting scenario-based assessments of the impact of rising oil prices on industry and financial markets, and believes it has sufficient capacity to respond.

 

Depending on market conditions, market stabilization measures of 100 trillion won or more will be implemented in a timely manner. If necessary, this 100-trillion-won program will be expanded, and additional preemptive response measures will be prepared.

 

To stabilize foreign exchange markets, the government will actively consult with the National Assembly to expedite passage of the pending Foreign Exchange Market Stabilization Tax Amendment and the Korea-U.S. Strategic Investment Special Act. A new framework for the National Pension Service will also be established promptly.

 

To ensure seamless market management and shield the real economy from adverse effects, the heads of the three sub-teams under the "Joint Agency Response Task Force on the Middle East Situation" will be elevated from director-general level to vice-minister level.

 

The Economic Ministers' Meeting chaired by the Deputy Prime Minister for Economic Affairs will be restructured into an "Emergency Economic Ministers' Meeting" format, with the Middle East situation response as its top priority. Presidential-level "Emergency Economic Review Meetings" will be convened on a rolling basis as needed.

 

The current Middle East situation is a crisis factor faced not only by Korea but by all major competing nations alike. The government will make every possible effort to turn this crisis into an opportunity for the Korean economy, in accordance with the President's direction. We ask the public to trust the government and focus on their normal economic activities.

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Cheong Wa Dae press release translatred by AI, edited by David Kendall