Iran crisis leads to rare fuel price reversal between diesel, gasoline
A sign at a gas station in Seoul shows gasoline priced at 1,970 won ($1.34) per liter, lower than diesel at 2,050 won per liter, Friday. Real-time data from the Korea National Oil Corp.’s Opinet website showed that as of 5 p.m. Friday, the nationwide average price of diesel was 1,887.38 won per liter, while gasoline averaged 1,871.83 won per liter. Yonhap
Korea is witnessing a rare reversal in fuel pricing amid the widening U.S.-Israel war on Iran, with diesel now costing more than gasoline at many domestic gas stations despite benefiting from lower fuel taxes.
Real-time data from the Korea National Oil Corp'.s Opinet website showed that as of 5 p.m. Friday, the nationwide average price of diesel was 1,887.38 won ($1.28) per liter, while gasoline averaged 1,871.83 won per liter.
The website showed the price trend in 10 of 17 municipalities and regions, including Seoul, Incheon, Ulsan and Gyeonggi Province.
The trend emerged in the wake of the U.S.-Israeli military strikes on Iran on Feb. 28, reflecting the limits of Korea’s tax policy in favor of diesel amid a global tightening of the fuel’s supply, according to industry officials.
They noted that diesel had long been sold at a lower price than gasoline in Korea, supported by a policy that levies 240 won less in tax per liter.
The policy is aimed at curbing fuel consumption by ordinary drivers who mostly use gasoline-powered vehicles, thereby helping to reduce greenhouse gas emissions.
The policy extends to commercial and public vehicles, along with industrial machinery, all powered by diesel.
Industry officials said diesel’s lower price than gasoline was unusual in global fuel markets, where it typically trades at a premium due to more complex refining and stronger demand.
They explained that gasoline is extracted from crude oil at temperatures between 30 and 140 degrees Celsius, while diesel is produced at 250 to 350 degrees Celsius.
Because gasoline can be refined at lower temperatures, it is relatively easier and cheaper to produce.
“The Iran crisis has caused diesel prices worldwide to surge dramatically,” a refinery spokesperson said.
He noted that since the start of the crisis, international diesel prices had jumped 56.22 percent to $145.13 per barrel, while gasoline prices rose 25.14 percent to $99.66 per barrel.
A public relations representative from another refinery pointed to panic buying triggered by unexpected supply instability.
He noted higher diesel demand, particularly in Europe, where everyday drivers commonly use diesel cars and many commercial vehicles also run on diesel.
“Global supply instability affects diesel prices more sensitively than gasoline,” he said.
He added, “While East Asian countries import crude oil and refine it into various petroleum products, Europe imports a significant portion of refined products directly from the Middle East, making it more sensitive to potential closures of the Strait of Hormuz.”
Industry officials forecast that diesel’s higher price relative to gasoline may persist, as the Iran conflict shows no signs of letting up and global supplies of the fuel remain tight.