Gas Price Raising in North Korea: Foreign Producers Have Reduced Supplies

Jul 26th, 2017

The current prices of gasoline and diesel fuel in North Korea are much higher than in the last month. According to Reuters’s investigation and the evidence of the North Korean defector, the price has increased dramatically due to the fact that China National Petroleum Corp (CNPC), a Chinese state – owned oil supplier, stopped selling fuel to Pyongyang.

The first and main reason for sales termination is the strained relations of the Juche regime with the world key players. With the aim of influencing the aggressive activity of Pyongyang in nuclear and missile spheres, in particular, to pressure North Korea to stop testing the missiles, the international community decided to impose on the country a number of sanctions. As CNPC is a state company, the government of China has easily influenced China National Petroleum sales policy. Regulatory sanctions were strengthened after North Korea had tested an intercontinental ballistic missile.

Private dealers who sell gasoline in Pyongyang and in the Northern border areas have increased fuel prices since early July. The price rose to$ 2.9 per litre, or almost $2.2 per kilo (a local measure of gasoline). Now diesel fuel costs more – about $1.5 per kg – a 20% increase. According to the data from the online media Daily NK, analysed by Reuters, the current prices compared to June have risen by 50%. The website Daily NK is a reliable source, as it collects and publishes information obtained from the defectors from North Korea.

China is the main supplier of fuel to the country. Minor volumes of fuel come from the Russian Federation. If China continues to restrict shipments of oil and petrochemicals, very soon North Korea will experience a serious economic downturn. In view of this, the government of North Korea is looking for ways to get out of the situation, for example, seeking ways of smuggling fuel or looking for alternative suppliers.

Although fuel prices have dropped to $2 per kg by mid-month, it is twofold more than at the beginning of the year. Last year, Chinese refiners supplied North Korea with 45 thousand tonnes of diesel oil and 94 thousand tonnes of gasoline. CNPC is the largest supplier of fuel to Pyongyang. AS for North Korea, its government is the largest consumer of foreign fuel in the country. Ordinary citizens buy gasoline from private companies and smugglers.

At the moment the representatives of the CNPC do not comment on the situation on the shipment of oil to North Korea.