Crude Oil Holds Steady Despite Middle East Risks... Naphtha Plunges 12.7%

Crude Oil: Sourcing Shifts to the US and Others, Limiting the Decline
Naphtha: Continued Middle East Dependence Drives Steeper Drop

Amid the Iranian crisis shaking the Middle Eastern energy supply, crude oil imports managed to limit their decline to 5.3% by shifting sourcing routes, while naphtha imports plunged by 12.7%, showing a stark contrast in response.

According to the Korea Customs Service and Korea National Oil Corporation, crude oil imports in March decreased by only 5.3% despite reduced volumes from Middle Eastern countries such as Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates (UAE), as the country turned to non-Middle Eastern sources like the United States. In contrast, naphtha imports posted a sharper year-on-year decline of 12.7%, as alternative sourcing was not achieved.

The decline in crude oil imports from the Middle East was particularly pronounced. The reduction was seen across the region, rather than from a single country. Imports from Saudi Arabia fell by about 12%, Iraq by 8%, Kuwait by more than 40%, and the United Arab Emirates (UAE) by over 10%, marking a simultaneous decline from major oil-producing nations.

Meanwhile, non-Middle Eastern sources expanded rapidly. Imports from the United States surged by nearly 80%, making it the country with the largest increase. Canada, Norway, and Ecuador also entered as new suppliers, partially offsetting the drop from the Middle East. Crude oil sourcing is shifting from the Middle East to North America, Europe, and Central and South America.

In contrast, naphtha followed a different trend. Imports dropped by 12.7% year-on-year, a steeper decline than crude oil. The import volume fell from about 20.68 million barrels to 17.97 million barrels. However, Middle Eastern countries such as Qatar, Oman, the United Arab Emirates (UAE), and Kuwait continued to account for a significant share of the supply.

Some signs of change emerged. Imports from Greece more than tripled (over 200% increase), and the United States also started supplying, resulting in increased volumes. Oman saw its exports rise by more than 40%. However, shipments from the United Arab Emirates (UAE) fell by more than 60%, and those from Kuwait dropped by over 40%. Despite this reduction in major Middle Eastern volumes, the overall supply structure remained largely unchanged, with Qatar maintaining a high share, preventing a structural shift. Countries such as India remained at similar levels compared to the previous year.

In summary, crude oil imports withstood the shock by shifting sourcing routes, but naphtha struggled to adapt due to structural limitations. While crude oil can be sourced from the global market, naphtha’s process characteristics and contract structures make it difficult to switch suppliers in the short term, which accounts for the difference in response.

An official from the petrochemical industry explained, “The global crude oil market is large enough to allow for sourcing route changes, but naphtha is highly dependent on supplies from the Middle East, making short-term substitution difficult. Even though both are energy sources, the options for response are different.” The official added, “Crude oil can be handled through blending and other measures, but naphtha requires specifications suited to the process, so it is difficult to substitute with simple volume increases alone.”

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