Countries Halt Russian Crude Oil Imports Amid 'Ukraine Invasion'...Domestic Industry "Watching Closely"

International Oil Prices Surpass $100... Supply Concerns Rise Amid Sanctions on Russia
Domestic Russian Crude Oil Imports Account for 5%... "Securing Alternative Sources"

[Asia Economy Reporter Moon Chaeseok] As international oil prices surged following Russia's invasion of Ukraine, oil refiners around the world have stopped purchasing Russian crude oil, prompting domestic refiners to consider countermeasures. Their primary plan is to diversify import sources in preparation for potential disruptions in Russian crude oil supply.

According to industry sources on the 2nd, Brent crude oil prices stood at $110.23 per barrel, and West Texas Intermediate (WTI) futures were at $108.41 per barrel as of that day. The price of Dubai crude, which serves as the benchmark for domestic crude imports, was $98.71 per barrel the previous day, approaching the $100 mark.

In response, refiners in various countries are halting purchases of Russian crude oil to avoid violating Western sanctions against Russia. According to foreign media, some refiners such as Neste in Finland and Preem in Sweden have stopped buying Russian crude. Other refiners have significantly reduced their purchases of Russian crude. Russia's refining capacity is 674 million barrels per day (b/d), accounting for about 6.6% of global capacity. This ranks third after the United States (17.8%) and China (16.4%).

Since direct sanctions on Russian energy by the United States and the European Union (EU) would increase inflation burdens in their respective countries, the West is reluctant to impose direct sanctions on Russian energy exports. However, due to the unpredictability of the Russia-Ukraine war situation and the possibility of energy sanctions in the worst-case scenario, refiners worldwide appear hesitant to purchase Russian crude.

Domestic refiners say that since the proportion of Russian crude oil imports is small, they are not directly affected, but they remain alert to the current situation of growing global crude supply instability. According to the industry, Russian crude accounted for about 5% of domestic crude imports last year, a negligible level, while Middle Eastern crude accounts for 60-70%. Additionally, they maintain long-term inventory to prepare for oil price fluctuations, so there is expected to be no immediate damage from sanctions on Russia. However, in response to the surge in international oil prices and the possibility of disruptions in Russian crude imports, they are further diversifying import sources within the region, as well as from the United States and the Middle East.

In this context, Iran is gaining attention as one of the alternative supply sources. This is because the possibility of a nuclear agreement between Iran and the West is increasing, raising the prospect of resuming Iranian crude oil exports. South Korea was one of the largest importers of Iranian crude, accounting for about 13% of its imports, but imports were banned in 2018 after the U.S. government withdrew from the Iran nuclear deal. Jeon Yujin, a researcher at Hi Investment & Securities, said, "If Western sanctions on Russian energy are implemented, it will inevitably disrupt the operation of major refineries in Europe that receive crude oil through pipelines connected to Russia." She added, "Domestic refiners will have to find alternative suppliers, which will incur additional costs, but since the proportion of Russian crude is minimal, the overall impact will not be severe."

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