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South Korea's crude oil imports from the US have increased by
150% year-on-year, with flows averaging 350,000 b/d between January
and mid-October 2019, more than double the 140,000 b/d imported
last year over the same period. Meanwhile, intakes of major
exporters have dropped sharply since last year, with flows from
Saudi Arabia down 2%, Russia 3.3% and Kuwait almost 11%. The
country hasn't imported any Iranian barrels since early 2019
Q2.
October imports of US crude oil will approach but will not
surpass the record high of 436,000 b/d achieved in July. Sanctions
imposed by the US on Iran, together with China avoiding US crude
due to the tension between the two countries, provided a lot of
space for crude oil trade between the US and Korea to flourish
since 2019 Q3. South Korean purchasers have been interested in
Eagle Ford condensate to replace Iranian barrels, while more WTI
Light and other light sweet grades of the US become more popular as
we approach IMO 2020.
Crude oil flows from the Middle East Gulf to South Korea have
been declining after the attacks on Saudi Arabia's Abqaiq
processing facility and Khurais oil field last month. Korean
imports from Middle East's five major exporters declined by more
than 4% so far in October month-on-month and around 14%
year-on-year.
Most of the country's refiners start announcing their strategy
for 2020, with Hyundai Oilbank planning to commence production and
supply of very low sulphur fuel oil from early November. The
refiner has been importing volumes of heavy, sour grades such as
Mexico's Maya, Kuwait export blend, Iraqi Basrah Heavy and US Mars,
according to IHS Markit Commodities at Sea.
Its compatriot, refiner SK Energy increased its production of
gasoil and gasoline ahead of 2020. Meanwhile, S-Oil, the country's
third-largest refiner, whose top shareholder is Saudi Aramco,
expects refining margins to strengthen from the end of 2019
onwards, on the back of inventory build-up ahead of implementation
in advance of IMO 2020.
Posted 30 October 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
