The government will extend the tax cut on fuel consumption by an additional two months amid growing tensions in the Middle East, Finance Minister Choi Sang-mok said Monday.

South Korea has applied a 25 percent discount on the consumption of gasoline and a 37 percent discount on the consumption of diesel and liquefied petroleum gas, which were supposed to expire at the end of this month.

The government began implementing a fuel tax cut scheme in 2021 and has extended it eight times so far, with the reduction rate having been adjusted in accordance with global energy prices.

"In an effort to prevent the growth of economic burdens on the people, the government will extend the tax cut by another two months through the end of June," Choi said during an emergency economic ministers' meeting.

Dubai crude, the country's benchmark, has been on a constant rise in recent months reaching $89.87 per barrel in April from $78.85 in January, $80.88 in February and $84.18 in March amid the Israel-Hamas war and other geopolitical uncertainties.

Global oil prices are feared to rise further following Iran's attack on Israel last weekend and concerns over a wider conflict in the region.

South Korea depends on imports for most of its energy needs, and rising global oil prices have caused inflationary pressure to flare up in the country.

Consumer prices, a key gauge of inflation, increased 3.1 percent on-year in March, rising over 3 percent for the second consecutive month on high prices of fruits, fresh food items and energy.

The government has said inflation is forecast to ease at a slower pace than earlier expected, though the country is projected to reach the target rate of 2 percent by around the end of this year.

Choi warned that the crisis in the Middle East could lead to growing volatility in the financial market and possible supply chain risks, vowing to "stay vigilant and mobilize all possible policy capabilities."

The finance ministry said a pan-government joint emergency response team of related agencies was launched to monitor the economic situation and financial market on a real-time basis and implement necessary measures based on contingency plans. (Yonhap)