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South Korea Iran Oil Imports Drop To 2-Year Low

South Korea oil

Crude oil imports from Iran into South Korea in May fell to the lowest since January 2016 at less than 180,000 bpd, Reuters reports, citing customs data. That comes in at a total of 758,903 tons, versus 1.02 million tons in May 2017.

The decline in Iranian imports—mainly condensate—began earlier this year, before Trump’s announcement of sanctions against Tehran, as Iran production slowed and its new condensate splitter started up. As a result, the cumulative import decline for the first five months of the year came in at 33 percent to 5.45 million tons.

Imports from Saudi Arabia also declined in May, by 23.6 percent to 763,620 bpd. Saudi Arabia is South Korea’s largest crude supplier. While Iranian and Saudi imports declined, shipments from the United States and Russia increased. Imports from the U.S. rose threefold to 95,800 bpd, and imports from Russia jumped 78 percent to 218,165 bpd.

South Korea is the world’s fifth-largest crude oil importer, and diversity of supplies is vital. The last time there were sanctions against Iran, South Korea managed to score a waiver by pledging to cut the amount of crude it buys from Tehran.

Related: The Bullish And Bearish Case For Oil

Imports of Iranian crude are seen to continue falling in the coming months. In May, the managing director of the National Iranian Oil Company Ali Kardor told S&P Platts that South Korea was worried about sanctions on tankers since “they didn't have their own shipping and were outsourcing, like charter, so maybe that is why the issue. But we told them that our ships are ready for you."

Tanker insurance may turn out to be the biggest hurdle to Iran’s crude oil exports following the expiry of the 180-day wind-down period before sanctions kick in. Thee issues will likely prevent the members of the International Group of P&I from insuring tankers carrying Iranian crude against risks if they call on Iranian ports to export or import oil and oil products.

By Irina Slav for Oilprice.com

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