South Korea Extends Fuel Price Caps Through Chuseok Holiday, Fiscal Costs Mount

South Korea extended its fuel-price caps for another four weeks on September 18, 2026, shielding motorists during the Chuseok holiday as Brent crude hovered near $110 a barrel. Wholesale prices remain capped at 1,784 won ($1.31) per liter for gasoline and 1,773 won for diesel. The government has set aside 4.2 trillion won for the first six months of the caps and an additional 1.5 trillion won for the extension. Refiners have yet to receive compensation, and disputes over loss calculations could delay payouts, leaving the ultimate taxpayer cost uncertain. The measures, first imposed in March after US strikes on Iran, have stretched beyond their initial budget window. Economists warn the caps weaken the link between global and domestic prices, favor heavy fuel users and dampen incentives to conserve. Consumer inflation remains well above the Bank of Korea's 2% target, pushing President Lee Jae Myung's approval rating to a record low.