S. Korea to keep fuel price caps as Hormuz closure fans inflation

South Korean Finance Minister Koo Yun-cheol said Monday the government will maintain temporary fuel price caps for an unspecified period as the effective closure of the Strait of Hormuz continues to drive up global oil prices, The Korea Times reported.

The price ceilings, introduced in mid-March 2026 weeks after U.S.-Israeli strikes on Iran effectively blocked a critical oil shipping lane, have now been frozen for a third consecutive two-week review cycle — a signal the government sees no near-term relief from energy-cost pressure on South Korean households.

"We plan to maintain the measure for some time until the situation in the Middle East stabilizes," Koo told reporters Monday, according to The Korea Times. "We need to watch oil price trends."

The government reviews its fuel price ceilings every two weeks and adjusts them accordingly. The most recent review, conducted Thursday, produced no change — the third straight period without an adjustment. The ceilings were first imposed in mid-March 2026, weeks after the Strait of Hormuz was effectively shut following U.S.-Israeli strikes on Iran in late February, cutting off a corridor that carries a significant share of global crude exports.

Despite the energy shock, Koo said the broader economy has held up. South Korea's gross domestic product expanded 1.7 percent in the first quarter of 2026, the strongest quarterly growth since the third quarter of 2020 and well above the central bank's original forecast of 0.9 percent. "Compared with other major countries, inflation appears to have been managed relatively well," Koo said, according to The Korea Times. He projected full-year 2026 growth above 2 percent, while cautioning that "how far beyond the 2 percent threshold it will go remains to be seen, as it depends on other factors, such as the strength of the semiconductor upcycle and effects from the conflict in the Middle East."

Koo also addressed a looming labor dispute at Samsung Electronics, whose unionized workers have announced a strike beginning May 21. "We should not let the discord between labor and management cause us to squander this opportunity, when the world is racing to secure semiconductors from South Korea," he said, The Korea Times reported. "I once again urge for the two sides to make a wise judgment," Koo added.

South Korea imports nearly all of its crude oil and is among Asia's most exposed economies to Middle East supply disruptions. The government has not announced a timetable for winding down the price cap program.