South Korea imported some 353,000 bpd of Iranian crude last month, up 17 percent on March ahead of the removal of sanction waivers that granted South Korea and another seven countries to legally import certain amounts of Iranian crude despite U.S. sanctions.
A month earlier, South Korea’s imports of Iranian crude reached 1.2 million tons, or 8.8 million barrels which was a 23-percent increase on February and a fivefold increase on January, when Korean refiners resumed their purchases of Iranian crude.
Reuters reports the monthly rise will be followed by a sharp drop this month as Washington did not renew the sanction waivers for Iranian oil importers. The picture would be the same for Japan as the two are the staunchest U.S. allies in Asia and have been careful to maintain their traditionally strong relationship with Washington.
Both South Korea and Japan stopped importing Iranian oil well before the U.S. sanctions snapped back last November and then they waited for a couple of months before they started importing oil from Iran while the waivers lasted. Neither South Korea nor Japan expect any major negative impact from the cancelation of the waivers, officials from the two countries have said. However, now they will have to find an affordable alternative to Iranian oil, especially condensate, of which South Korea is a major importer.
One obvious alternative would be U.S. light crude, which is comparable in quality with Iranian condensate. South Korea is already the second-largest oil client of the U.S. as of the end of 2018, after Canada and ahead of China. The average daily intake of U.S. crude in South Korea last year was 236,000 bpd. This is actually lower than what South Korea imported from Iran during the waiver period, at 235,533 bpd for January to April this year, but now that the waivers have been removed, shipments of U.S. light will most likely increase.
By Irina Slav for Oilprice.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.