N. Korea Fuel Prices Surge After China Cuts Crude Sales

Gasoline and diesel prices surged in North Korea in the weeks after a Chinese state oil company suspended fuel sales to the country, according to data reviewed by Reuters and an interview with a North Korean defector.

China National Petroleum Corp, a state-controlled company, halted diesel and gasoline sales to North Korea "over the last month or two", amid international pressure on Pyongyang to curb its nuclear and missile programs, Reuters reported.

Scrutiny of China's commercial ties with its isolated neighbor intensified further following North Korea's first test of an intercontinental ballistic missile two weeks ago.

The price of gasoline sold by private dealers in Pyongyang and the northern border cities of Sinuiju and Hyesan jumped to $2.18 per kilogram as of July 5, up 50% from $1.46 per kg on June 21, according to Reuters analysis of data collected by the Daily NK website.

Oil products are sold by weight in North Korea. Daily NK is run by North Korean defectors who collect prices via phone calls with fuel traders in the North.

Kang Mi-jin, a defector who speaks regularly to market sources inside North Korea and reports commodity prices for Daily NK, said the price spikes in recent weeks were caused initially by rumors later confirmed that China was restricting the flow of oil to North Korea. North Korea gets most of its fuel from China, with some coming from Russia. A prolonged cut by China would threaten critical supplies of gasoline and diesel, and force North Korea to find alternatives sources of refined fuel products.

"After North Korea's frequent missile tests, the international community has vowed to tighten sanctions and China simply cannot exclude itself from the recent movement, although it probably does not want to indefinitely cut off fuel sales to the North," Kang said.

Although gasoline prices eased to $2.05 per kg by July 12, they are still more than double from the beginning of the year, when they were averaging just under $1 per kg, the data show.