International Oil Prices on the Rise

International oil prices exceeded $65 a barrel including Dubai oil, which accounts for the largest portion of Korea’s imported oil.

The Korean National Oil Corporation (KNOC) stated that the prices of Dubai oil, which was traded on May 17, rose by 37 cents to $65.07 a barrel. This marks the highest price since registering at $65.19 a barrel on April 16. Due to the recent news that major petroleum companies including British Petroleum, Murphy Oil and ConocoPhillips suspended their refining facilities, international oil prices are expected to rise further.

Moreover, concerns that oil reserves would drop as the demand for gasoline in the U.S. climbed for “driving season” in the spring became the reason for rising oil prices. Oil prices in the spot market in Singapore, which is connected with Korean oil prices, surpassed $90 a barrel for the first time on a weekly basis.

Between May 14 and 18, the prices rose by $2.87 to $90.18 a barrel from the previous week. Before that, the highest price was $87.41 a barrel in the first week of August last year.

As a result of this trend, international gas prices are skyrocketing. The KNOC said that the national average price of unleaded gasoline went up by 5.22 won week-on- week to 1,538.20 won per liter in the third week of this month. The national average oil price has been on the rise for 14 consecutive weeks. The prices have been the highest in Seoul (1,609.54 won), followed by Incheon (1,571.29 won), and Gyeonggi (1,552.41 won).

Lee Dal-seok, a senior researcher of Korea Energy Economics Institute, stated, “As international oil prices are increasing and exceeding those of Dubai oil, domestic prices are expected to surpass 1,548.01 won (the price in the third week of August last year) soon.

abc@donga.com