Oil Prices Plunge Below US$60

      December 17, 2014 12:02

      The price of Dubai crude oil, which accounts for 80 percent of Korea's petroleum imports, has fallen below US$60 a barrel for the first time since May 2009.

      The Korea National Oil Corporation said Monday that the price of Dubai crude traded in Singapore fell 1.57 percent to $59.56. The decline came after the energy minister of the United Arab Emirates on Sunday said that the country would not cut crude output even if the price falls below $50.

      The Dubai decline is pushing down domestic gasoline prices to drop as well. According to KNOC data, gasoline prices here fell for the 24th consecutive week to W1,656.6 per liter (US$1=W1,088).

      Some gas stations in Daegu and Gyeonggi Province surrounding Seoul have begun selling gasoline at around W1,400 per liter.

      But gasoline prices are dropping much more slowly than international crude oil. Dubai crude has gotten 44.8 percent cheaper since the beginning of the year, but gasoline has fallen only 12.3 percent over the same period.

      Choi Dong-won at the Korea Institute for Industrial Economics and Trade said, "Due to the complicated process of purchasing crude oil, declines in international oil prices were not reflected immediately in gasoline prices, and taxes account for a large portion of pump prices."

      The continued fall in global oil prices has raised expectations for a positive economic impact on Korea, which relies completely on imports. The Wall Street Journal reported that oil imports account for the biggest portion of Korea's GDP and that declining crude prices would ensure that the country is the biggest beneficiary of the trend.

      The daily estimated that Korea will be able to save $34.8 billion in oil import costs, which accounts for 2.4 percent of GDP.

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