Middle East crude share in S.Korea’s first-half imports set to hit 32-year low
Middle East crude share in South Korea’s crude imports for the first six months of the year is set to hit the lowest level in more than three decades, reflecting deeper output cuts by Middle Eastern oil producers amid the coronavirus outbreak.
Of the country’s total crude imports during January-June, 67.0% of crude is expected to come from the Middle East, or 1.91 million barrels-per-day (bpd), according to Reuters calculations based on data from Korea National Oil Corp (KNOC) and ship tracking data from Refinitiv Eikon.
That is down from 72.8% during the same period last year and would be the country’s lowest first-half share of Middle East crude since 1988, when Middle East oil producers supplied 62.1% of South Korea’s total crude needs.
“The share of Middle East crude decreased because Middle Eastern oil producers deepened their output cuts and South Korea’s domestic crude demand weakened, while U.S. crude imports didn’t fall sharply,” said Lee Dal-seok, senior research fellow at the Korea Energy Economics Institute (KEEI).
South Korea, the world’s fifth-largest oil importer, typically imports between 70% and 80% of its total crude diet from the Middle East, mainly from Saudi Arabia, Kuwait and Iraq.
The drop in Middle East crude imports comes as the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, agreed to curtail their production by 9.7 million barrels in May and June, and extended the cuts until end-July.
Meanwhile, the share of crude imports from Americas which includes U.S. and Mexican crude, increased to record highs of 19.6% in the first half of the year.
Looking ahead, Lee said the share of Middle East crude imports is expected to increase to around 70% in the second half of the year on falling U.S. crude production and improving fuel demand.
Source: Reuters (Reporting By Jane Chung; Editing by Rashmi Aich)