Seoul — South Korea's crude oil imports from Iran dropped 45.8% year on year in July in the wake of the re-imposition of US sanctions, while intakes from Kazakhstan, the US and Mexico jumped as alternative sources.
The Northeast Asian country imported 6.2 million barrels of crude from Iran last month, compared with 11.44 million barrels a year ago, data released late Thursday by the Korea National Oil Corp. showed. This marks the ninth consecutive decline since November last year when imports from Iran fell 26.8% year on year to 10.37 million barrels.
The July imports, however, were up 12.8% from 5.49 million barrels in June. For the first seven months of this year, Iranian imports fell 36% year on year to 56.2 million barrels, compared with 87.81 million barrels in the year-ago period.
In 2017, Iranian crude oil imports increased 32.1% to 147.87 million barrels. The country's monthly imports of Iranian crude had increased since January 2016 when the US and EU lifted sanctions on Iran.
The sharp decline in crude imports from Iran was largely attributable to fewer condensate purchases following the startup of new condensate splitters in the Persian Gulf nation.
The decline is also due to South Korea trying to pare back crude shipments from Iran in a bid to secure an exemption from the US' decision to re-impose sanctions on Tehran over its nuclear program, according to a KNOC official.
South Korea has called for a US sanctions waiver to keep buying Iranian condensate saying it is hard to find alternative sources of condensate due to limited suppliers. About 70% of Iranian crude brought into South Korea is condensate, and more than half of the condensate which South Korea imports are from Iran.
South Korea has held two rounds of consultations with the US in June and July, and the two sides would meet for a third meeting sooner or later, according to an official at the Ministry of Trade, Industry and Energy.
In order to fill the loss of Iranian barrels, South Korean importers have increased intakes from Kazakhstan, the US, Mexico and other non-OPEC suppliers.
The country's imports of Kazakhstan's light CPC Blend soared more than seven times to 7.68 million barrels in July, from 1.07 million barrels a year ago. This made Kazakhstan the fourth-biggest crude supplier to South Korea in July, overtaking traditional Middle East suppliers such as the UAE, Iran and Qatar.
Over January-July, intakes from Kazakhstan jumped nearly four times to 31.15 million barrels, from 7.32 million barrels a year ago. South Korea imported 5.37 million barrels of crude from the US, compared with no purchases a year ago. For the first seven months, South Korea's intakes of US crude jumped more than six times to 19.7 million barrels, from 3.08 million barrels a year earlier.
South Korea's imports of Mexican crude also doubled to 3.98 million barrels in July, from 1.95 million barrels a year earlier. The country's imports of Mexican crude are expected to further increase as Hyundai Oilbank said it would purchase more Mexican Maya, and other sour and heavy grades thanks to its expanded refining capacity and improved heavy oil upgraders.
Meanwhile, South Korea's crude imports from its biggest supplier Saudi Arabia fell 10.6% year on year to 24.38 million barrels in July. South Korea's crude imports from Middle Eastern suppliers dropped 14.5% year on year to 68.47 million barrels last month. South Korea's intakes of Middle East crude increased in June after sliding for nine months in a row, but fell again in July. Over January-July, imports from the Middle East dipped 8.3% year on year to 495.72 million barrels, compared with 540.79 million barrels in the same period last year, as a result of OPEC-led drive to limit their production in order to balance an oversupplied market.
In total, South Korea imported 96.67 million barrels, or 3.12 million b/d, of crude oil in July, up 3.3% from 93.58 million barrels a year earlier. This marked the fourth consecutive increase in the country's crude imports since April, but the July imports were down 1.4% from 97.99 million barrels in June. For the first seven months, the country's crude imports climbed 2.8% year on year to 654.1 million barrels.
As a result of the increased crude imports for the past months, South Korea's crude stockpiles climbed 28.3% year on year to 51.18 million barrels in July, compared with 39.89 million barrels a year ago, according to the KNOC data. The country's crude stockpiles have climbed steadily on a yearly basis since November 2015 on the back of increased crude oil imports for the past months.
South Korean stockpiles of overall oil products also rose 13.6% year on year to 71.15 million barrels in July.
South Korean refiners and condensate splitters, processed 97.09 million barrels of crude in July, or 3.13 million b/d, up 0.2% from 96.88 million barrels a year ago.
