Korea opens oil spot market to help control inflationary pressure

Korea's will open an on-line oil spot market as part of its ongoing effort to control inflationary pressure that can disrupt sustainable economic growth, the government said Thursday.

Economic policymakers at the weekly consumer price review meeting said the market to be launched Friday will enhance transparency and competition in the local petroleum market, which could help bring down prices.

The move comes after the country's consumer prices jumped 4 percent in 2011 from an year earlier, hitting the upper ceiling of the Bank of Korea's 2-4 percent target band.

Consumer price growth declined to 3.1 percent in February, but Seoul stressed the need to keep close tabs on price movements because of soaring international crude oil prices and other developments.

A barrel of Dubai crude that makes up the bulk of the country's imports surged to $122.9 as of Monday from an average of $105.5 in December.

The spot exchange to be operated by Korea Exchange will permit direct buying and selling of petroleum products. Local refiners such as S-Oil Corp. and GS Caltex Corp. will sell products while oil agents and frontline gas stations will be able to buy the fuel at competitive prices.

In addition to oil products, government officials said direct online trading of farm products will pursued to further stem inflationary pressure.

Online trading, which can reduce distribution-related costs, accounts for just 2.8 percent of all farm product transactions in the country that topped 29.1 trillion won last year. (Yonhap)