Diesel prices, traditionally perceived as cheaper than gasoline, are now closely trailing gasoline prices. While domestic prices have not surged dramatically, the international diesel refining margin has reached an all-time high, raising concerns about potential future price increases for diesel.
According to the Korea National Oil Corporation's oil price information system, Opinet, the average selling price of regular gasoline at nationwide gas stations was 1,858.57 won per liter on September 15, while automotive diesel was priced at 1,843.92 won per liter. The price difference between the two fuels was just 14.65 won.
The price gap has recently remained in the 10 won range. In the second week of September, the average selling price of gasoline was 1,859.1 won per liter, while diesel was 1,844.0 won, resulting in a difference of 15.1 won.
As domestic diesel prices approach those of gasoline, the international market is witnessing a stronger trend for diesel.
According to a report by Reuters, citing data from financial information firm LSEG, the refining margin for 10ppm sulfur diesel in Asia surpassed $87 per barrel on September 16, marking a record high. This figure exceeds the previous record of $85.6 per barrel set in March. Compared to early this year, before the escalation of armed conflict in the Middle East, when the margin was around $22, it has increased nearly fourfold.
The diesel refining margin is an indicator of the profitability of producing and selling diesel from crude oil. The recent surge in margins is attributed to supply disruptions at global refining facilities.
In Russia, drone attacks in Ukraine have led to ongoing shutdowns of major refining facilities. According to Reuters, half of the six major diesel-producing refineries in Russia have significantly reduced production or halted operations this month. In the United States, diesel inventories are currently lower than the five-year average, contributing to rising prices.
However, it is not certain that higher international diesel prices and margins will immediately result in diesel becoming more expensive than gasoline at domestic gas stations. Changes in international oil product prices typically take 2 to 3 weeks to reflect in domestic gas station prices, and the government’s implementation of a maximum price system for oil products adds another variable.
The current maximum oil price system, in its ninth iteration, sets the supply price for gasoline at 1,784 won per liter and diesel at 1,773 won. The government is also maintaining a fuel tax reduction measure until September 30, with current fuel taxes at 698 won for gasoline and 436 won for diesel.
* This article has been translated by AI.
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