Accelerated Import of U.S. Crude Oil Due to COVID-19

From Iran Sanctions to Increased North American Crude Oil Imports
US Imports Accelerate Due to COVID-19 and Plunging Global Oil Prices

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] While the volume of crude oil imports from the United States has steadily increased this year, the amount imported from Saudi Arabia, the country's largest crude oil supplier, has shown a declining trend. As oil imports from Iran became difficult due to U.S. sanctions, the U.S. emerged as an alternative supplier. The spread of the novel coronavirus disease (COVID-19) and the sharp drop in international oil prices led to a decline in North American crude oil prices, accelerating the increase in import volumes.

According to the refining industry on the 9th, crude oil imports from the U.S. increased to 13.41 million barrels, 12.27 million barrels, 13.24 million barrels, and 14.82 million barrels from January to April this year. These figures are higher than last year's 8.54 million barrels, 12.39 million barrels, 8.13 million barrels, and 11.13 million barrels for the same months.

On the other hand, imports of Middle Eastern crude oil generally decreased. Saudi Arabia, the largest crude oil supplier to Korea, saw its import volumes decline to 26.53 million barrels, 23.46 million barrels, 25.09 million barrels, and 22.37 million barrels during the same period. The United Arab Emirates (5th largest supplier) recorded imports of 8.22 million barrels, 10.25 million barrels, 7.06 million barrels, and 5.53 million barrels, while Qatar (7th largest supplier) saw its imports fall to 6.54 million barrels, 3.92 million barrels, 3.07 million barrels, and 4.56 million barrels.

This is because the average price of North American crude oil (WTI) dropped significantly below that of Middle Eastern crude (Dubai crude). The international price of WTI fell to $57.53 per barrel (January), $50.54 (February), $30.45 (March), and $16.70 (April). In contrast, Dubai crude was priced at $64.32 (January), $54.23 (February), $33.71 (March), and $20.39 (April), while Oman crude was $64.71 (January), $54.52 (February), $34.02 (March), and $20.49 (April).

A refining industry official explained, "Iranian crude oil, which is a condensate type used for naphtha production, accounted for the second largest import volume domestically, but imports became impossible due to U.S. sanctions on Iran. As light crude oil from the U.S. emerged as an alternative, imports increased, and with prices being even lower, the volume of U.S. imports rose."

As the domestic refining industry increased imports of U.S. crude oil, Middle Eastern oil-producing countries lowered the premium (OSP) prices attached to exports to Asia starting in May to maintain their market share. Initially, Middle Eastern producers expected that Saudi Arabia, the United Arab Emirates, and Qatar would increase their market share due to U.S. sanctions on Iran. However, contrary to expectations, Korea's imports of U.S. crude oil continue to rise.

Accordingly, Saudi Arabia reduced the OSP for light crude oil exported to Asia by $6 per barrel in April and $10.2 in May, and for medium crude oil by $6 and $9.4 respectively.

Another refining industry official said, "Due to the sharp drop in international oil prices and changes in external circumstances, diversifying crude oil import sources to ensure stable supply has become a trend. The increase in North American crude oil imports is expected to continue for the time being."

This content was produced with the assistance of AI translation services.