Seoul — South Korea's crude imports from the US nearly halved in November from a year earlier, while shipments from Saudi Arabia continued to rise as local refiners find their staple Middle Eastern oil to be the most reliable and economical feedstock option in times of market uncertainty.
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South Korean refiners imported 832,068 mt, or 6.1 million barrels, of US crude in November, down 49.3% from 12.03 million barrels they received in the same month a year earlier, preliminary customs data showed.
The cutback in US crude imports marked the seventh consecutive monthly decrease. The November shipments from the US were also down 33% from 9.1 million barrels in October.
Over January-November, US crude imports fell 20.2% year on year at 99.37 million barrels.
On the contrary, South Korea's crude imports from its top supplier Saudi Arabia climbed 2.1% year on year to 3.33 million mt, or 24.41 million barrels, in November, compared with 23.91 million barrels in the same month last year.
The November Saudi oil shipments marked the third consecutive monthly increase, the customs data showed.
Cheaper than US oil in 2020
Medium and heavy sour Middle Eastern grades are cheaper than light sweet US oil and the staple Saudi crude is the most preferred feedstock choice for many refineries in times of weak refining margins, several plant operation managers at South Korean refiners said.
South Korean refiners paid an average outright price of $43.72/b for Saudi crude imported so far this year, sharply lower than $53.27/b paid for the shipments from the US.
On the contrary, South Korea paid on average $65.17/b for crude shipments from the US in 2019, cheaper than an average of $66.87/b paid for Saudi crude cargoes received in the same year.
North American benchmark WTI used to trade at a steep discount to Brent and Dubai a few years ago, but such discounts have dissipated this year, which have prompted South Korean refiners to aggressively cut back on light sweet US crude purchases.
The majority of US crude that South Korean refiners purchase consists of light sweet grades including WTI and Eagle Ford, but these companies are reluctant to buy high volumes of the light and middle distillate-rich refinery feedstock due to dismal domestic demand for gasoline, jet fuel and diesel.
The share of Middle Eastern crudes in South Korea's import basket in the first 10 months was 69%, higher than the 67.1% in 2019 and 68.4% in
2018, according to S&P Global Platts calculation based on Korea National Oil Corp. data.
The share of Middle Eastern crudes was more than 82% in 2015 and before.
In total, South Korea, the world's fifth-biggest crude buyer, imported 9.292 million mt, or 68.11 million barrels, of crude oil in November, down 26.8% from 93.1 million barrels a year earlier, the customs data showed.
For the first eleven months, the country's crude imports dipped 9% year on year to 894.39 million barrels, compared with 982.46 million barrels a year ago.
The fall in crude imports comes with a sharp rise in the country's stockpiles of crude oil.
South Korea's crude stockpiles jumped 20.7% year on year at 48.44 million barrels as of end-October, compared with 40.13 million a year ago, according to state-run Korea National Oil Corp, or KNOC.
But the country's overall stockpile of refined oil products declined 6% from a year earlier at 62.9 million barrels as of end-October.
South Korean refiners and condensate splitters processed 82.14 million barrels of crude in October, down 0.2% from 82.33 million barrels a year ago, the KNOC date showed.
Final oil data for November will be released later in December by KNOC.