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South Korea Suspends Iranian Oil Imports

Fuel Pump

South Korea has suspended all buying of Iran crude and superlight crude, more commonly known as condensate after the U.S. stepped up pressure on Iran crude buyers to stop importing its crude, Reuters reports, citing unnamed sources familiar with developments.

The country is one of the biggest oil and gas importers in the world and one of Iran’s top clients in Asia. It is currently trying to negotiate a waiver from the U.S. sanctions, but judging by the State Department’s stated goal to reduce Iran’s crude oil exports to zero, success is uncertain. There is a slim chance, however, after earlier this week a senior State Department official said they are ready to work with individual oil buyers on a case-by-case basis.

The Korean government, the sources said, had pressured refiners into suspending orders for July shipments of Iranian crude, which is the first time this has happened since 2012, Reuters notes.

Earlier this month, Reuters also reported that South Korea had upped crude oil imports from Kazakhstan, already looking for alternative supplies as the November 4 deadline for the sanctions draws nearer.

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: Oil Prices Drop On US-China Trade War, Saudi Production Boost

Japan, another large Iranian oil client, is still buying crude from it but it will likely stop, too, being one of the closest U.S. allies in the region. Recently, Japanese media reported Prime Minister Shinzo Abe had cancelled a planned visit to Tehran, caving in under pressure from Washington.

India is also facing U.S. pressure, and despite an official stance that it will continue buying Iranian crude, some large buyers are already winding down imports on fears their access to American bank financing will be closed if they violate the sanctions.

By Irina Slav for Oilprice.com

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  • Mamdouh G Salameh on July 06 2018 said:
    With more than 30,000 American troops armed with nuclear weapons defending South Korea against the North, it is not surprising that South Korea will stop importing Iranian crude if it fails to get a waiver from the Americans.

    Japan is a heavy weight and therefore it might get a waiver from the US and continue to import Iranian crude.

    If, however, both Japan and South Korea did succumb to pressure from the United States and halted completely their imports of Iranian crude estimated at 400,000 barrels a day (b/d), then China and the petro-yuan will come to the aid of Iran. Given the current tense political and trade relations between the US and China, the Chinese will be only happy to oblige.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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