South Korea will start buying Iranian crude this month or next, the parent company of the country’s largest refinery, SK Innovation, told Reuters.
“As South Korea received a waiver and has been in talks with Iran about the first import volume, it seems (Iran oil) could be brought in late in January or early February at the earliest,” the chief executive of the company, Kim Jun said.
South Korea stopped buying Iranian oil completely ahead of the November 4 sanctions imposed on Iran by Washington. 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.
Thanks to this strategy, South Korea was among eight Iranian oil importers that were granted six-month sanction waivers in November, alongside India, China, Japan, and Italy. In the same month, after the announcement of the waivers, S&P Global Platts reported, citing unnamed sources, that South Korea would resume Iranian crude oil imports at a rate of about 4 million barrels a month.
According to the new Reuters report, South Korea could import up to 200,000 bpd of Iranian crude, most of it’s the superlight grade called condensate: the country was Iran’s biggest condensate buyer before the sanctions and its third-largest importer of oil.
Buying Iranian oil will likely be cautious, however: even with the waivers, Washington has made it clear it expected its allies to eventually reduce their intake of Iranian crude to zero, replacing it with crude from other sources, including from the United States. While some would probably do their best to comply, others, such as India, perhaps won’t be able to afford such a move: New Delhi recently launched a supposedly sanction-proof payments system for Iranian crude.
By Irina Slav for Oilprcie.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.