North Korea sanctions

North Korea fuel prices soar after UN sanctions capped supply

Analysis suggests the price hikes were caused primarily by a cut in supplies as the regime scrambles to hoard fuel, wary of a potential fuel crunch

PUBLISHED : Monday, 18 September, 2017, 5:44pm
UPDATED : Monday, 18 September, 2017, 8:39pm

Petrol and diesel prices rose sharply in North Korea after its sixth nuclear test and as the UN Security Council imposed new sanctions capping fuel supply, market data showed.

The Security Council unanimously passed a resolution on September 11 banning exports of condensates and natural gas liquids to the North and capping the annual supply of refined petroleum products at two million barrels and crude at its current levels.

The price of petrol sold by private dealers in the capital Pyongyang and northern border cities of Sinuiju and Hyesan spiked to US$2.51 per kg as of September 13, up 45.1 per cent from US$1.73 per kg on September 5, according to Reuters analysis of data compiled by the Daily NK website.

The website is run by North Korean defectors who collect prices via phone calls with traders in the North.

Diesel prices also surged 61.5 per cent from US$1.30 per kg to US$2.10 per kg during the same period.

Lee Sang-yong, who speaks regularly to sources inside the North and supervises market data from them, said the price hikes were caused primarily by a cut in supplies as the regime scrambles to hoard fuel, wary of a potential fuel crunch.

“North Korean authorities are likely to have intentionally reduced supplies in the market after the nuclear test, thinking the UN Security Council sanctions would affect their own repository,” Lee said.

“In addition, astute traders are cutting their supplies on the expectations that the prices would go up further, while there’s some psychological effect among ordinary citizens who worry about war.”

US Ambassador to the UN Nikki Haley said on Sunday the Security Council has run out of options on containing the North’s nuclear programme and Washington may have to turn the matter over to the US Defence Department.

North Korea launched a missile over Japan into the Pacific Ocean on Thursday in defiance of the new Security Council.

White House national security adviser H.R. McMaster said on Friday, after the latest North Korean missile launch, that the United States was running out of patience: “We’ve been kicking the can down the road, and we’re out of road.”

The latest petrol price represents a 70.7 per cent and 153.5 per cent surge compared with statistics posted on June 8 and December 1, respectively, less than one week after the Security Council adopted its last two resolutions on North Korea.

North Korea gets most of its fuel from China and some from Russia. US and South Korean officials have said the North imports some 4.5 million barrels of refined petroleum products and two million barrels of crude oil each year.