South Korea on track to phase out Russian crude imports amid ample US, Saudi supplies

April crude imports from Russia tumble 47% yr on yr

To get rid of Russian oil consumption after time period contracts expire

US crude imports rise for thirteenth consecutive month

South Korea is on monitor to section out Russian crude imports as home refiners enhance US and Saudi purchases to satisfy excessive operation charges, main the world’s fourth greatest crude importer to chop April shipments from the non-OPEC producer by round half, business members stated.

South Korea’s April crude imports from Russia plunged 46.7% yr on yr to 4.33 million barrels, newest information from state-run Korea Nationwide Oil Corp. confirmed. Russian crude shipments declined 21% yr on yr to 16.20 million barrels in the course of the first fourth months of 2022.

Most April arrival cargoes have been bought previous to the beginning of the Russia-Ukraine battle. It might be troublesome to terminate Russian oil imports over the close to time period as sure volumes are tied to quarterly and half yearly time period contracts, refinery feedstock managers at main South Korean refiners advised S&P World Commodity Insights. The feedstock managers declined to be recognized as a result of the delicate nature of oil commerce with Russia.

South Korea will finally halt Russian oil purchases as many firms look to keep away from commerce, logistical, authorized, and monetary issues that would have an effect on company reputations, an official at a significant South Korean refiner stated.

Slicing Russian crude provide won’t have a significant impact on the South Korean refining business and its economic system as the sunshine and medium candy Far East Russian grades, together with ESPO, Sokol and Sakhalin mix, make up lower than 4% of South Korea’s refinery feedstock imports, in keeping with the feedstock managers.

South Korea imported 85.89 million barrels, or 2.86 million b/d, of crude in April, up from 83.36 million barrels, a yr in the past. The imports rose for the seventh consecutive month yr on yr in April.

The nation’s whole crude imports gained 12.5% yr on yr to 345.52 million barrels within the first 4 months of the yr, as native refiners ramped up crude throughput and run charges to seize sturdy product cracks and profitable export margins.

US, Center Japanese crude

South Korean refiners have a large North American crude buying and selling community, whereas Center Japanese crude time period provide is rising with the gradual enhance in OPEC+ manufacturing, refinery feedstock managers and analysts at Korea Commerce-Funding Promotion Company stated.

South Korean refiners are more likely to favor aggressive US crude and import a minimum of five-six Very Giant Crude Carriers of sunshine candy US oil month-to-month, in keeping with the feedstock managers.

The nation’s US crude imports gained for the thirteenth consecutive month yr on yr in April, rising 23.8% to about 11.41 million barrels, the KNOC information confirmed. Its US crude imports surged 45.9% yr on yr to 50.39 million barrels within the first 4 months of the yr.

South Korean refiners are actively trying to increase their time period crude provide consumption from main Center Japanese producers as profitable product cracks for transportation fuels, significantly gasoil, incentivize most run charges.

Crude imports from prime provider Saudi Arabia climbed 17.7% yr on yr to 26.69 million barrels in April, marking the eighth consecutive month of an year-on-year enhance, the KNOC information confirmed.

Crude imports from Kuwait elevated 5.4% yr on yr to 10.37 million barrels in April. The shipments from Iraq have been up 2.5% yr on yr at 6.49 million barrels and people from the UAE jumped 51.4% yr on yr to five.96 million barrels.

Though the tempo and scale of OPEC+ manufacturing is way from passable for Asian end-users, the gradual enhance in Center Japanese crude output implies that there are extra time period barrels that South Korean refiners can request, the feedstock managers stated.

South Korea’s refinery feedstock imports are poised to achieve round 505 million barrels within the first half of 2022, up from 468.2 million barrels in the identical interval a yr in the past, as native refiners enhance crude throughput to seize sturdy cracking margins, in keeping with crude merchants and refinery operation managers primarily based in Seoul, Ulsan, Incheon, and Daesan.

South Korea’s prime 10 crude suppliers (Unit: ‘000 barrels)

*Consists of different suppliers

Supply: Korea Nationwide Oil Corp.