Worries about unrest in Libya, where oil outages have risen to as much as three quarters of its 1.6 million barrels per day output, pushed Brent crude to almost $120 and US crude to more than $103 on Thursday. Dubai crude also rallied above $100.

Oil prices have eased slightly since then after Saudi Arabia raised output to calm fears of supply disruptions sparked by Libya's uprising.

"At the caution status, the government will focus to limit unnecessary energy consumption, while minimising inconvenience in business activities and people's living," a statement from the ministry of knowledge economy said, adding it would turn off some public lights and advertisements.

It added the government would provide incentives for saving energy.

South Korea, heavily dependent on the Middle East crude oil imports, has four-step energy policies. Under the policy, it declares "attention" if prices hover at $90-$100 for more than five days, "caution" if $100-$130, "warning" if $130-$150, and "seriousness" if more than $150.

South Korean President Lee Myung-bak has called for a tighter national energy policy to counter the impact of higher prices stemming from political instability in the Middle East.