Plunge in international oil prices and how it affects S. Korea: Expert

  • 6 years ago
국제유가 하락...한국경제에 미치는 영향은?

International oil prices have been on a roller coaster ride recently.
Dubai crude hit a 4-year high in October, but fell by more than 20-percent last month.
Our Ko Roon-hee delves deeper to find out how this plunge could affect the South Korean economy.
Politics and economy are inseparable..., and this time, its oil prices.
In the first week of October, Dubai crude, South Korea's benchmark, hit its highest price in almost four years,
... trading at more than 80-dollars a barrel.
But it sharply dropped to below 60-dollars a barrel by the last week of November.
Two other global oil benchmarks, Brent crude and West Texas Intermediate crude, had their weakest month for more than 10 years in November, losing more than 20-percent.
For the reason behind the sharp falls last month, analysts pointed to OPEC raising its production of oil and the United States' waivers on Iran oil sanctions.
"Here in South Korea, the drop in international oil prices can be seen at local gas stations. Gasoline prices at this gas station in Seoul have dropped by around 20 cents per liter over the past month."
The owner of this gas station says domestic factors also contributed to the fall.
"Gasoline prices fell after the South Korean government slashed domestic transport fuel taxes on November 6th... that helped cut gasoline prices by 11-cents a liter. The plunge in international oil prices also caused the fall."
A fall in oil prices is generally good news for South Korea... an oil importing country.
It means lower production costs and stable consumer prices.
But an economic expert suggests that the fall in oil prices could be a sign of problems further down the road.
"The drop in oil prices can be one of the signals that the global economy is slowing down.
Because the economy is getting worse, companies have cut their production...and there might have been less demand for crude oil. If the global economy slows down, it'll affect Korea's exports as well."
Members of the OPEC will meet on Thursday in Vienna to decide on future strategies to stabilize the oil market.
They're working toward a deal to reduce oil output by at least 1-point-3 million barrels per day.
Ko Roon-hee, Arirang News.