South Korea’s Imports of Iranian Crude Remain Constrained in April
South Korea’s crude oil imports from Iran dropped 22K b/d m-o-m to 303K b/d in April, down 101K b/d y-o-y and 100K b/d from the average in 2017, according to Customs data. South Korea has historically been one of Asia’s major buyers of Iranian oil, mainly purchasing condensate or ultra-light oil. However, the country’s imports of Iranian crude have been slowing down in recent months, with shipments averaging 301K b/d in January-April 2018, down 188K b/d from the same period last year. The decline comes despite Tehran’s efforts to retain its Asian market share by cutting official selling prices.
There are several reasons that could explain this, including: i) reduced availability of Iranian South Pars condensate exports due to a new condensate splitter commencing operations, and ii) growing worries over the re-imposition of US sanctions against Iran, which prompt buyers to find alternative feedstock. For instance, South Korean refiner Hyundai Oilbank recently made its first purchase of Norwegian condensate, while SK Incheon Petrochem has announced it will continue buying light crude from Russia and Kazakhstan, Reuters reports.
Total South Korean crude oil imports stood at 2.83M b/d in April, up 250K b/d m-o-m and 13K b/d y-o-y. Imports from its biggest supplier, Saudi Arabia, dropped 66K b/d y-o-y to 811K b/d. But Saudi supplies remain robust, with shipments averaging 870K b/d in January-April 2018, up 6K b/d from the same period in 2017.
By mid-afternoon in London, ICE Brent was trading at $78.81/bbl, up $1.69/bbl from the end of Monday’s trading day. The ICE Brent/WTI spread stood at $7.99/bbl, up $2.2/bbl w-o-w and $3.29/bbl higher from the average year-to-date.