Petrol prices pumped up in Pyongyang

Sebastien BERGER
North Koreans watch footage of a missile launch on September 16, 2017

Petrol prices are being pumped higher in Pyongyang in the wake of United Nations sanctions restricting exports of oil products to nuclear-armed North Korea.

Retail prices have gone up around 20 percent in two months, AFP saw in the capital -- and are now more than double what they were at the beginning of the year.

Two weeks ago the UN Security Council imposed its eighth set of sanctions on the North in an effort to rein it in following its sixth nuclear test, which Pyongyang said was a hydrogen bomb.

Under leader Kim Jong-Un, North Korea has made rapid progress in its weapons programmes, and it launched two intercontinental ballistic missiles (ICBMs) in July that appeared to bring much of the US mainland into range.

Kim and US President Donald Trump have since engaged in a war of words, heightening tensions.

The latest UN sanctions for the first time imposed limits on supplies to the North of the fuel it needs to keep its citizens and soldiers moving. North Korea has few hydrocarbons of its own.

China –- by far the North's biggest supplier and key diplomatic protector –- confirmed in a statement late Friday it would adhere to the new sanctions from October 1.

Exports of refined products will be capped at 2 million barrels a year beginning in 2018.

Under the sanctions, crude oil exports are limited to current levels. China has not issued official figures for its crude sales to its neighbour for several years.

But according to the US mission to the United Nations, Beijing provides Pyongyang with around 4 million barrels a year of crude oil, and 4.5 million barrels of refined oil products such as petrol and diesel.

There is a livelihood exemption in the rules, but the measures would seem to amount to a cut of more than 55 percent in oil product supplies, and it appears to be having an effect in Pyongyang.

In North Korea petrol is sold by the kilogram rather than the litre, and payment in hard currency is required for retail buyers.

"It was $1.90 yesterday, today it is $2," said a petrol station employee. "I expect the price will go up in the future."

In January prices were below $1 per kilogram, and stood at around $1.65 in July, so they have gone up about 20 percent in the last two months and more than doubled so far this year.

- Bellicose rhetoric -

There is significantly less traffic on the roads in Pyongyang than earlier this year, although AFP reporters in the capital have not seen any evidence to back up Trump's tweet that: "Long gas lines forming in North Korea. Too bad!"

Trump dubbed Kim "Rocket Man" in a speech at the United Nations last week in which he threatened to "totally destroy" the North if it attacked the US or its allies.

In a statement on Friday Kim responded by calling the US head of state "mentally deranged" and a "dotard" who would "pay dearly" for his comments -- triggering Trump to describe him as a "madman".

The increasingly bellicose rhetoric has raised fears of a physical conflict.

Even so analysts say that the economic consequences of sanctions will do nothing to dissuade Pyongyang, which says it needs nuclear weapons to defend itself against the threat of invasion.

Reduced fuel supplies would lead to problems with logistics and transport, Andrei Lankov of Korea Risk Group told AFP.

But he added: "Even if economic problems lead to starvation, the policy will not change."

- 'Built for this' -

One litre of petrol weighs 0.77 kilograms, so the current Pyongyang price is equivalent to $1.54 per litre.

Residents of the North Korean capital say the recent increases have come in a series of small steps.

Prices had already jumped around April, which analysts said at the time could have been due to stockpiling by the authorities in anticipation of an embargo.

"The market is anticipating the worst -- a cut-off or decrease in supply via China -- and the authorities are using price rises along with other control mechanisms to absorb the pain in advance," said John Delury of Yonsei University in Seoul.

But the impact on the regime could be limited, he added.

"The key vulnerability is the military -- but presumably their stockpiles are prioritised and well coordinated with decisions about the nuclear and missile programmes," he said.

"They are built for this. It's what they are good at."