Middle Eastern Crude Oil Proportion Shows Clear Decline

Imported Crude Oil Below 60%
Down 10%p Compared to First Half of Last Year
Trade with Iran Cut Off, Increase from US and Brazil

Saudi Aramco Refining Facility

[Asia Economy Reporter Choi Dae-yeol] The proportion of Middle Eastern crude oil in South Korea's oil imports has fallen below 50% for the first time in history. Just four or five years ago, the share of Middle Eastern crude oil, which exceeded 80%, has steadily declined due to the cessation of trade with Iran, one of the major import countries, and the increase in imports from non-Middle Eastern countries such as the United States, Brazil, and Kazakhstan.

According to export-import statistics from the Korea International Trade Association on the 17th, the total crude oil imported by South Korea in the first half of this year (January to June) amounted to $29.029 billion, of which the volume from the Middle East was $17.363 billion. The share of Middle Eastern crude oil in total imports was 59.8%, nearly 10 percentage points lower compared to last year (68.1%). The decline in the proportion of Middle Eastern crude oil is similar when measured by weight.

South Korea has traditionally imported a large amount of crude oil from Middle Eastern countries such as Saudi Arabia, Kuwait, and the United Arab Emirates (UAE). This is because these countries are geographically close, and most of the domestic refining facilities are optimized for Middle Eastern crude oil. Since the late 1980s, when statistics on crude oil import trends by continent were first compiled, the share of Middle Eastern crude oil consistently remained between 70% and 80% into the 2010s.

Among non-Middle Eastern countries, the United States is aggressively increasing its crude oil exports. The U.S., which had banned oil exports by law for reasons including energy security, lifted export restrictions in December 2015 under the president's directive and has since actively promoted sales. South Korea also ranks second in crude oil imports by individual country, following Saudi Arabia. After narrowly surpassing Kuwait last year, the gap has widened this year.

Brazilian crude oil has also surged significantly in the past one to two years. Until the 2000s, Brazil had some crude oil trade with South Korea, but it effectively ceased in the 2010s. With local state-owned companies leading oil field development and increasing crude oil production, South Korea's imports from Brazil have increased substantially since last year. Refining companies equipped with advanced facilities, such as Hyundai Oilbank, have increased imports of relatively cheaper Latin American crude oil.

Although this trend is a result of the domestic refining industry's diversification of import sources following huge losses due to COVID-19 last year, it is currently difficult to predict whether this trend will continue steadily. Environmental regulations have made crude oil development difficult in the U.S. and Latin America. An industry insider said, "Crude oil is used not only in industry but also in many aspects of daily life, so the key is how stably it can be supplied rather than the price," adding, "Although U.S. crude oil from shale oil is cheap, it is mostly based on short-term spot contracts, so it is hard to predict whether this will lead to a mid- to long-term trend."

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