South Korea will extend its tax reduction scheme on transport fuels for an additional two months, on the back of strengthening international oil prices.
The tax reduction scheme, which offers a 25pc discount on gasoline and 37pc discount on diesel, was initially scheduled to end on 31 August, but will now remain in effect until the end of October.
This latest extension aims to mitigate the impact of rising international oil prices on the domestic economy, according to a press release by the country's Ministry for Economy and Finance on 18 August.
The scheme has been extended at least twice since its introduction in November 2021, owing to high inflation rates and uncertain global oil prices. The previous extension occurred in April.
South Korean refiners initially held back on August-loading cargoes in anticipation of increased domestic demand, expecting buyers to secure cheaper fuel before the tax cut's original end date, according to market participants.
But since the tax cut has been extended, the pick-up in domestic demand is also likely to be delayed. This delay could trigger last minute exports from South Korean refineries, said Korean traders. But the quantity of additional exports remains uncertain.
