A World Grappling with High Oil Prices: South Korea's Bold Move Towards Supplementary Budget

Faced with soaring international oil prices, countries around the globe are deploying a range of policy tools, from price controls to strategic petroleum reserve releases, yet with limited success. South Korea, in particular, has opted for the bold move of preparing a supplementary budget to mitigate the impact of high oil prices. While this may offer short-term relief, it raises concerns about fiscal soundness, necessitating a cautious approach. According to market analysis from FireMarkets, despite these policy efforts, oil price volatility is expected to persist in the near future.

A Global Struggle Against Rising Oil Prices

In March 2026, a surge in international oil prices posed a significant threat to the global economy. Governments worldwide are deploying various policy tools to secure energy supplies and curb inflation, but their effectiveness has been limited. According to Mae Kyung, major countries are making diverse efforts such as price controls, strategic petroleum reserve releases, and tax cuts, but the fundamental causes of geopolitical risks and supply chain instability have not been resolved, preventing a decline in oil prices.

Policy Efforts and Limitations of Each Country

• Price Controls: Some countries are implementing price controls to curb rising oil prices, but this has been criticized for distorting the market and causing supply shortages.


• Strategic Petroleum Reserve Releases: Releasing strategic petroleum reserves can stabilize oil prices in the short term, but it is not a long-term solution.


• Tax Cuts: Reducing fuel taxes can alleviate the burden on consumers, but it can also reduce government revenue.

South Korea's Bold Choice: Supplementary Budget

In contrast to other countries, South Korea has opted for the bold move of preparing a supplementary budget to mitigate the impact of high oil prices. This decision is believed to be aimed at securing the necessary funds for supporting vulnerable groups and implementing measures to stabilize prices. However, the supplementary budget could raise concerns about fiscal soundness and potentially exacerbate inflation. Therefore, careful policy design and implementation are needed to maximize the effectiveness of the supplementary budget and minimize side effects.

Market Reaction to the Supplementary Budget

Following the announcement of the supplementary budget, the South Korean stock market showed mixed results. Energy-related stocks rose, but banking and construction stocks fell due to concerns about interest rate hikes. The won/dollar exchange rate rose slightly in the foreign exchange market. These market reactions demonstrate the coexistence of expectations and concerns regarding the supplementary budget.