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South Korea has announced that it will lower import taxes on oil products such as fuel oil and gasoline from the start of this month, Reuters reports.

The finance ministry has said that import tariffs on oil products will be slashed from 3 percent to 1 percent, commencing April 1, as a measure to reduce the impact of high global prices on the local market and to curb inflation in the country.

South Korea, which imported approximately 6.7 million barrels of Bunker C fuel oil last year, decided to maintain current tariff levels on crude oil and LNG at 1 percent as the Ministry of Strategy and Finance claimed that it would have faced a loss of over US$500 million in tax revenues if it had decided to go ahead with a cut.

Crude oil imports into South Korea were down to 873 million barrels in 2007, compared with 888 million barrels the previous year. The country also imported 500,000 barrels of heating oil and 900,000 barrels of diesel last year.

Some analysts predict that the April tariff cut may lead to a temporary increase in imports of oil products, but the general consensus seems to be that the impact will only be significant if there is a reduction in the tariff on crude oil as refiners continue to be faced with weak crude refining margins.