South Korea Considering Oil Tax Cuts Owing to Market Volatility

South Korea is experiencing minimal economic impact following Israel's retaliatory strike on Iran, but may consider a further reduction in fuel oil tax if global market volatility increases, President Yoon Suk Yeol's office said on Sunday.

The comments, made during a meeting to assess the security and economic situation, follow the government's recent decision to extend subsidies on oil products for an additional two months until end-December, although with lower tax cut rates.

"The impact of geopolitical risks in the Middle East on our economy is expected to be limited," Yoon's office said in a statement.

"We are expecting no major impact on the domestic crude oil supply and prices, but if there is high volatility from the global market, we will respond through various stabilisation measures such as an additional reduction in fuel taxes."

The President's office also committed to maintaining a 24-hour monitoring system to prepare for a potential crisis in the Middle East, promising to react immediately as necessary.

Separately, the finance ministry also reported minimal impact on crude supplies, trade, supply chains and maritime shipping in a statement following an intra-agency meeting. They will continue monitoring the situation.