South Korea acts to protect economy from oil price hikes 

www.channelnewsasia.com First created : 29 January 2003 1410 hrs (SST) 0610 hrs (GMT) Last modified : 29 January 2003 1410 hrs (SST) 0610 hrs (GMT)

South Korea, the world's fourth-biggest oil importer, has announced a package of measures to cushion its economy from rising oil prices.

They include cuts in oil import tariffs and local taxes, as well as limiting energy use of businesses like department stores.Advertisement

Official data show that a US$1 rise in crude oil prices costs South Korea US$750m in lost trade surplus annually, while cutting economic growth by 0.1 percentage point.

South Korea, Asia's fourth-largest economy, is vulnerable to global oil price moves as it imports all of its crude needs, more than 70 percent of which is sourced through the Middle East.

Benchmark US crude has soared over US$35 this month versus an average of US$26 in November.

Oil has risen some 30 percent since mid-November on concerns war in Iraq could upset supply from the Middle East while a prolonged strike in Venezuela has curtailed oil production and exports.