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South Korea receives no Iranian crude imports for fourth straight month in Dec

Seoul — South Korea imported no Iranian crude for the fourth straight month in December due to the re-imposition of US sanctions on Tehran, while intakes from the US and Kazakhstan rose sharply as alternative sources, data released late Wednesday by Korea National Oil Corp showed.

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South Korea has fully suspended crude imports from Iran since September 2018, marking the first time Asia's fourth biggest oil consumer has taken no Iranian cargoes for more than three months since September 2012, amid then US-led sanctions on Iran.

For the full 2018 year, Iranian crude imports plunged 60.1% to 58.2 million barrels from 147.87 million barrels in 2017. The 2018 import volume was the smallest since 2015, when South Korea imported 42.4 million barrels.

To make up for the loss of Iranian barrels, South Korea's crude imports from the US surged more than six times to 13.61 million barrels in December from 2.07 million barrels a year earlier.

The volume was the largest since South Korea began importing US barrels in September 2014. The December imports were also double the 6.66 million barrels imported in November.

The imports made the US South Korea's third-biggest crude supplier in December, overtaking traditional Middle East suppliers including Iraq, the UAE and Qatar.

The sharp increase was driven mainly by increased purchases of Eagle Ford condensate as an alternative to Iran's South Pars condensate, industry sources said.

South Korea's imports of Kazakhstan's light sweet CPC Blend crude also more than doubled to 6.6 million barrels in December from 3.16 million barrels a year earlier. Over January-December, imports of CPC Blend jumped 109.2% on year to 55.43 million barrels.

South Korea has also increased imports of Nigeria's Escravos condensate as another alternative to Iran's South Pars. It imported 1.22 million barrels from Nigeria in December, the KNOC data showed.

Imports from Nigeria totaled 8.97 million barrels over the full 2018 year, compared with none in 2017.

"We can continue buying lighter oil from Nigeria and other African counties this year as alternatives to Iranian grades because it is uncertain whether the 180-day waiver is being extended," an official at SK Innovation said. KNOC's next monthly data release will likely indicate that South Korea resumed importing Iranian oil in January, as the country's biggest refiner SK Innovation received 2 million barrels of South Pars condensate this month.

The refiner took its first delivery of 1 million barrels on January 19 and is due to take the second delivery on January 31.

Hyundai Oilbank also plans to receive its first cargo of 1 million barrels South Pars condensate in mid-February, a company trading source with direct knowledge of the matter.

Hanwha Total is set to take delivery of around 3 million-5 million barrels of South Pars condensate in February, according to a separate source.

South Korea was granted a six-month exemption for Iranian crude imports after agreeing to reduce its purchases "significantly" when US sanctions against Tehran came into force in early November.

The South Korean government refused to elaborate on the "significant volume," but sources familiar with the matter said the country would be able to import 4 million-6 million barrels/month of Iranian crude, mostly condensate, under the waiver.

South Korea imported an average of 12.32 million barrels/month of crude and condensate from Iran in 2017.

About 70% of Iranian crude brought into South Korea has been South Pars condensate, and more than half of the condensate that South Korea imports has been from Iran. Other Iranian grades that South Korea has imported were mostly Iran Heavy and Forozan. In total, South Korea imported 92.99 million barrels, or 3 million b/d, of crude oil in December, down 6.9% from 99.85 million barrels a year earlier, as a result of receiving no cargoes from Iran.

The December imports were also down 2.5% from November's 95.33 million barrels.

For the full 2018 year, the country's crude oil imports edged down 0.2% to 1,116.28 million barrels from 1,118.17 million barrels in 2017. The slight decrease comes after its crude imports rose 3.7% in 2017 from 1,078.12 million barrels in 2016.

The KNOC data also showed South Korea's crude stockpiles jumped 21.3% year on year to 51.03 million barrels in December, which indicates the country may continue reducing crude imports in months to come.

The country's stockpiles of overall oil products also rose 18.6% year on year to 71.86 million barrels last month.

South Korean refiners and condensate splitters processed 93.91 million barrels of crude in December, or 3.03 million b/d, down 6.2% from 100.16 million barrels a year ago.

--Charles Lee,

--Gawoon Philip Vahn,

--Edited by Wendy Wells,