Government to Impose Tough Penalties for Illegal Fuel Price Practices... Signs of Refiners’ Collusion Detected

As international oil prices soar amid instability in the Middle East, the government is urging refiners to refrain from raising prices, while the Korea Fair Trade Commission (KFTC) has launched an investigation into suspected collusion. Together, these moves signal a ramp-up in pressure on the petroleum market.
On the 9th, Minister of Trade, Industry and Resources Kim Jeong-kwan warned, "The government will respond strictly to any actions that, taking advantage of rising international oil prices, run counter to efforts to stabilize prices for ordinary people."
Presiding over a meeting of the "Middle East Situation Response Headquarters" at the Korea Chamber of Commerce and Industry in Jung District, Seoul, Kim said the ministry is keeping a close eye on the recent sharp rise in oil prices in the domestic market. The minister convened this meeting as his first official engagement after returning from visits to Canada and the United States the previous day.
Kim noted, "Normally, domestic oil prices move with a lag of about two weeks behind international crude prices, but in the past few days they have jumped sharply." He criticized refiners, saying, "By reflecting higher international prices in domestic prices within just a day or two, refiners have reinforced the public perception that prices 'move up quickly when they rise, but fall only slowly.'" He went on to urge the industry, including oil refiners, "to set transparent and fair oil prices so that the burden from higher international oil prices caused by the recent situation in the Middle East is not passed on to consumers in a one-sided and excessive manner."
The meeting was attended by the four major domestic refiners—SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank—as well as industry groups such as the Korea Petroleum Association, the Korea Oil Distribution Association, and the Korea Oil Station Association. Institutions including Korea National Oil Corporation (KNOC), the Korea Petroleum Quality & Distribution Authority, NongHyup Agribusiness Group, and Korea Expressway Corporation were also present.
The Ministry of Trade, Industry and Energy of the Republic of Korea issued an "attention" level alert under the resource security warning system on the 5th and is responding preemptively and systematically to the rapidly changing situation in the Middle East. To prepare for emergencies, the ministry is focusing on securing supplies by diversifying import sources and bringing in overseas production, while also drawing up detailed, phased plans for releasing strategic oil reserves so they can be deployed immediately if supply-and-demand conditions deteriorate.
The ministry stated that it will "vigorously carry out a government-wide joint inspection and special enforcement campaign to prevent illegal acts such as collusion, sales of fake oil, and short deliveries from occurring under the pretext of rising oil prices."
In a separate briefing to the National Assembly's Trade, Industry, Energy, SMEs, and Startups Committee on the afternoon of the same day, Minister Kim said, "So far, there has been no disruption to energy supplies." Regarding the decision to issue an "attention" alert under the resource security warning system, he explained that it was "a measure to activate our response system preemptively in preparation for the possibility of a prolonged situation in the Middle East and to prepare necessary actions in a more systematic way."
Meanwhile, the Korea Fair Trade Commission (KFTC) conducted on-site inspections on the same day at the four major domestic refiners—SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank. The KFTC is reported to have found indications that refiners colluded on petroleum product prices and has launched a formal investigation.
Earlier, KFTC Chairperson Joo Byung-ki had signaled stronger market surveillance, mentioning the possibility of investigating potential collusion after fuel prices surged in step with rising oil prices. The KFTC has been monitoring trends in petroleum prices through its regional offices.
aber@fnnews.com Park Ji-young and Kim Chan-mi Reporter