[Kim Hye-in, Digital Team Journalist [email protected]]
Dubai oil rockets up by 10.4%, leading to surges in crude and jet fuel prices
Bank of Korea: “Upward pressure in March as well”… Variable in maximum price system
With rising military tensions between the U.S. and Iran, international oil prices have soared, causing import prices to increase for the eighth consecutive month. This rise in import prices has sparked concerns that it could trigger a domino effect on domestic consumer prices, putting perceived inflation on alert.
According to the export-import price index released by the Bank of Korea on the 17th, last month’s import price index stood at 145.39, up 1.1% from the previous month (143.74), and 1.2% higher than the same month last year.
This is interpreted as being influenced by the rise in international oil prices. Among raw materials, mineral product prices rose by 4.4%, and among intermediate goods, coal and petroleum products increased by 4.8%. Specifically, crude oil prices rose by 9.8%, jet fuel by 10.8%, and naphtha by 4.7%.
Lee Moon-hee, head of the price statistics team at the Bank of Korea, explained, “Although the won-dollar exchange rate slightly decreased last month, the tensions between the U.S. and Iran led to an increase in international oil prices, causing import prices in won terms to rise by 1.1% from the previous month and 1.2% from the same month last year.” Indeed, the average monthly price of Dubai oil rose 10.4% from $61.97 per barrel in January to $68.40 in February.
The issue is that the situation has worsened this month. After the U.S. airstrike on Iran at the end of last month, the international geopolitical climate has sharply cooled, resulting in a double whammy of rising oil prices and exchange rates.
Team leader Lee added, “Since the U.S. airstrike on Iran on the 28th of last month, international oil prices have risen 58.6% for Dubai oil by March 13, compared to the same period, and the won-dollar exchange rate has increased by 1.4% from last year’s monthly average. This trend will exert upward pressure on import prices in March as well.”
However, he also suggested that the increase in consumer prices could be somewhat limited. Lee pointed out, “Although the rise in international oil prices can quickly reflect on consumer prices through products like gasoline and diesel, the maximum price system implemented on the 13th could act as a variable.”
In addition, export prices also rose. Last month’s export price index increased by 2.1% to 148.98 from 145.86 the previous month. Agricultural, forestry, and fishery products rose by 4.8%, and computers, electronics, and optical devices increased by 5.4%, driving the overall increase. Prices of frozen seafood rose by 8.7%, diesel by 8.0%, DRAM by 6.4%, and gasoline by 4.5%.
Trade conditions have shown improvement. The Net Terms of Trade Index increased by 13.0% year-on-year to 104.25, thanks to a 10.3% rise in export prices, while import prices fell by 2.4% during the same period.
Meanwhile, the Income Terms of Trade Index also significantly improved, recording 135.41, up 31.8% from the same month last year, due to an increase in the export volume index (16.6%) and the improvement in the Net Terms of Trade Index.