Seoul: South Korea has announced a series of emergency steps to protect its economy as global fuel prices rise sharply due to tensions linked to Iran and disruptions in oil supply routes.
The government said it will raise the cap on domestic fuel prices while also expanding tax cuts on gasoline and diesel to reduce the burden on consumers. The tax cut on gasoline will be increased to 15 percent, while diesel will see a larger cut of 25 percent. Officials said the move is aimed at balancing market realities with public relief as energy costs continue to climb.
Alongside these steps, authorities will carry out a bond buyback programme worth about 5 trillion won, or roughly 3.3 billion dollars. The measure is intended to stabilise financial markets and keep government borrowing costs under control at a time of rising uncertainty.
South Korea is also strengthening its energy supply strategy. The government plans to increase the use of nuclear power plants to more than 80 percent of capacity and lift seasonal restrictions on coal power generation. In addition, export controls on naphtha, a key petrochemical material, are being introduced to ensure sufficient domestic supply.
The country is heavily dependent on oil imports from the Middle East, with a large share of shipments passing through the Strait of Hormuz. Ongoing tensions in the region have disrupted shipping routes, raising concerns about supply shortages and pushing up global oil prices.
The impact is being felt across Asia, where several countries are facing rising fuel costs and inflation pressures. Governments in the region have started taking similar steps, including tax relief, subsidies and energy saving measures, to manage the situation.
Experts say the current crisis could also accelerate a longer term shift towards alternative energy sources, including renewables and electric vehicles, as countries look to reduce their dependence on imported oil.
South Korea’s latest measures show a combined approach of easing pressure on households, stabilising financial markets and securing energy supplies as the global situation remains uncertain.