South Korea has stopped importing crude oil from Iran ahead of the U.S. sanctions that will enter into effect on November 5, Reuters reports, citing customs data. The country imported zero Iranian oil in September for the first time in six years.
The news is the expected end of a process: since the start of 2018, South Korean imports of Iranian crude had fallen by 49.1 percent from 2017, as of the end of September, to a total 7.15 million tons. The country’s total September imports also declined on an annual basis, by more than a tenth to 10.83 million tons.
The share of U.S. crude went up fivefold to 668,704 tons in the reported month, while imports of Saudi crude declined by 6.9 percent to 3.41 million tons.
South Korea is the world’s fifth-largest crude oil importer, and as such an important client for Iran’s oil alongside China and India. Yet South Korea is a close ally of the United States, and it is no surprise the country opted for full compliance with Washington’s insistence on importers to cut their intake of Iranian crude to zero.
Perhaps the country’s government hopes it will be rewarded with a sanction waiver so it can restart purchases of Iranian oil, although it would be at a much lower rate in all likelihood. Since the start of the Iranian year, in late March, South Korea had been buying Iranian crude at a daily rate of almost 300,000 barrels.
Earlier this year, reports emerged that South Korea was planning to stop buying Iranian oil in July, but official Korean sources refuted the claims, made by unnamed sources. In September, Bloomberg reported that South Korea had stopped importing Iranian earlier, in August, citing shipping data. Yet with Iranian tankers cloaking their journeys to crude oil buyers, official tracking data may not be as reliable as it used to be.
By Irina Slav for Oilprice.com
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However, a loss of South Korea’s 300,000 barrels a day (b/d) of Iranian crude will be more than compensated by increased purchases by China and India.
China’s oil imports this year are projected to exceed 10 million barrels a day (mbd) probably even hitting 11 mbd. A big chunk of these imports will come from Iran.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London