In this list

Analysis: COVID-19 resurgence may put brakes on South Korea's crude import uptrend

Commodities | Electric Power | Electricity | Energy | Energy Transition | Renewables | LNG | Natural Gas | Natural Gas (European) | Oil | Crude Oil | Refined Products | Shipping | Tankers

Market Movers Europe, March 27-31: Energy markets on edge amid financial turmoil, strikes and renewables contracts

Energy | Oil | Refined Products | Jet Fuel

Jet Fuel

Energy | Oil | Energy Transition

APPEC 2023

Energy | Electric Power | Nuclear | Electricity

EDF extends strike warning by another day, delays reactor returns further; forward prices rise

Agriculture | Shipping | Grains | Biofuels

What's keeping Russia-Ukraine grain deal afloat despite Putin's quibbles?

For full access to real-time updates, breaking news, analysis, pricing and data visualization subscribe today.

Subscribe Now

Analysis: COVID-19 resurgence may put brakes on South Korea's crude import uptrend


Gathering, mobility restrictions could chip off up to 400,000 b/d oil demand

Refiners may sharply reduce spot crude purchases

Pace of OPEC supply hike seen slow, OSPs considered expensive

  • Author
  • Charles Lee    Philip Vahn
  • Editor
  • Wendy Wells
  • Commodity
  • Oil
  • Topic
  • Coronavirus And Commodities OPEC+ Oil Output Cuts

South Korea's crude imports rose 6.3% year on year in June on the back of robust economic recovery, but a new wave of COVID-19 cases could put the brakes on the upward momentum in the second half 2021 as refiners expect strict mobility restriction measures to dampen domestic fuel sales, market sources and analysts in Seoul said.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The world's fifth-biggest crude importer received 79.35 million barrels in June, up 6.3% from 74.66 million barrels a year earlier, marking the third consecutive month of year-on-year increase, preliminary data from Korea Customs Service showed.

South Korea saw its refinery feedstock requirements and fuel demand increase in the second quarter as broad economic activity, including manufacturing, construction, goods and services exports and domestic travel, picked up rapidly following the rollout of the nationwide vaccination program in late February.

However, the recent spike in confirmed COVID-19 cases will likely dampen its oil demand in Q3 and early Q4, potentially leading to low refinery runs and cuts in crude and condensate imports, said an official at state-run Korea National Oil Corp.

South Korea has recorded a surge in COVID-19 infections over the past couple of weeks, with the nation's daily confirmed cases reaching a record high 1,615 on July 14. The Seoul metropolitan area has been under the strictest restrictions of the country's four-tier social distancing system since July 12, placing severe constraints on small businesses and population mobility.

The near-lockdown measures in the capital city with a population of around 10 million could shave off South Korea's overall oil products demand by anywhere between 150,000 b/d and 400,000 b/d, according to market research analysts at Korea Petroleum Association and middle distillate marketers at major South Korean refiners surveyed by Platts.

The country consumed 377.61 million barrels of oil products over January-May, or an average 2.5 million b/d, up 1.6% from 371.77 million barrels in the same period a year earlier, latest data from state-run Korea National Oil Corp. showed.

"Any drastic drop in transportation and industrial fuel sales will inevitably prompt [the country's] four major refiners to readjust and lower their crude throughput ... term contracted barrels will arrive steadily but spot purchases in the current trading cycle for September-loading cargoes could fall a lot," said a feedstock manager at S-Oil.

Middle East suppliers' market share

South Korea's crude imports from its top supplier Saudi Arabia fell 22.7% year on year to 3.09 million mt, or 22.65 million barrels, in June, the customs data showed. It marks the fourth consecutive month of year-on-year decline since March.

Although OPEC and its alliance clinched an agreement July 18 to ease production cuts by 400,000 b/d each month starting in August, South Korean refiners said the pace of the supply hike is slower than desired and major Middle Eastern producers are poised to see their market share in South Korea drop in 2021 amid expensive official selling prices.

South Korea received 218.64 million barrels from its top three Middle Eastern suppliers — Saudi Arabia, Kuwait and Iraq — in the first half 2021, which equates to around 46.8% the total crude imports over the period. The Middle Eastern suppliers' market share over the same period last year was 54.3%, according to Platts calculations based on the latest customs and KNOC data.

"OSPs have been on the sharp rise in the past few months ... refiners are generally content to call for minimum monthly term allocations and look for cheaper spot barrels in Africa, the Americas and Russia," said a light crude and condensate trader at a South Korean refiner.

Saudi Aramco had raised its OSPs for crude loading in August for all destinations. For Asia-bound crude, August OSP differentials against Dubai/Oman for Saudi Light, Medium and Heavy were all raised by 80 cents/b versus July levels.

Meanwhile, South Korea imported 1.674 million mt, or 12.27 million barrels, of US crude in June, more than double the 5.03 million barrels received in the same month last year, the preliminary customs data showed.

KNOC will release oil trade data for June in the week of July 25.


South Korea's crude imports (Unit: million barrels)

Crude Imports

Source: Korea Customs Service