International Oil Prices Reach $100 per Barrel... Domestic Inflation Pressure Rises

The Bank of Korea to Release Overseas Economic Focus on the 16th

Gasoline prices at gas stations nationwide have been declining for six consecutive weeks since the government's fuel tax reduction measure in November. The price of gasoline in Seoul has dropped to the 1,600 KRW per liter range for the first time in five months. According to Opinet, the oil price information site operated by the Korea National Oil Corporation, the gasoline selling price in the fourth week of this month recorded 1,634.6 KRW per liter, down 14.3 KRW from the previous week. The photo shows a gas station in downtown Seoul on the 26th. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Jang Sehee] International oil prices, which had sharply declined last December due to the impact of the Omicron variant, have risen again this year to around $80 per barrel, expanding the range of increase. With forecasts suggesting that international oil prices could soar to around $100 per barrel, upward pressure on domestic inflation is expected to intensify.

According to the Overseas Economic Focus released by the Bank of Korea on the 16th, recent international oil prices rebounded due to slow production increases by major oil-producing countries such as the United States, the Organization of the Petroleum Exporting Countries (OPEC), and the non-OPEC major oil-producing countries coalition ‘OPEC+’. Based on Dubai crude, international oil prices rose to around $80 per barrel in the first quarter of this year. As of the 14th, the price of Dubai crude rose to $83.75 per barrel. In December last year, it had fallen to as low as $72.8 per barrel.

The Bank of Korea analyzed that the recent shortfall in OPEC+ production increases was influenced by delayed new investments by U.S. shale companies amid the expansion of eco-friendly policies.

The Bank of Korea stated, "Major institutions expect international oil prices to remain high for the time being, and some, including Goldman Sachs, have raised the possibility that if crude oil supply constraints worsen, prices could temporarily exceed $100 per barrel within this year."

Meanwhile, due to the rise in international oil prices, import prices increased by 17.6% on an annual basis last year, marking the largest increase in 13 years. Import prices affect consumer prices through producer prices, and the Bank of Korea forecasts that the inflation rate this year could exceed 2.5%.