Barrels and Bravado: Seoul’s Strategic Oil Surge Defies Global Supply Shocks

South Korean imports of crude increased to 11 million tonnes in June from a year ago's 10.2 million tonnes, latest customs data showed. The increase comes in the face of a volatile world energy market with the government set to impose a severe reduction in duty on crude imports and amid new U.S. tariffs and Middle East supply uncertainty.

 

Key Points
Upstream Imports Up: Imports rose to 11 million tonnes in June, year-on-year by nearly 8%, as refiners boosted purchases to cover summer demand and hedge against geopolitical risks.

 

Reduced Import Duty: The government reduced the import duty on crude and naphtha from July 14 as a measure to lower the production cost of the petrochemical sector and stabilize domestic prices.

 

Diversification Accelerates: Korean refineries are accelerating Canadian and US imports and attempting to maximize Middle East oil alternatives in the aftermath of Strait of Hormuz threats and persistent tensions in the area.

 

Tariff Tensions: America reinstated its 25% across-the-board tariff on South Korean imports from August 1, compelling Seoul to seek alternative sources of energy and negotiate for trade relief.

 

Energy Security Policies: Governments have made sure that strategic oil reserves are robust, with protective measures to counter any potential effect on supplies from the Middle East.

 

Market Response: World oil prices edged higher, with Brent crude at over $70 a barrel, as investors weighed the two pulls of Saudi output increases and looming US sanctions on Russia. Trade Balance: Contrary to the rise in energy imports, South Korea had a $600 million trade deficit for the first half of July, capturing cost pressures of the rise in oil prices and uncertainty regarding tariffs.

 

Source: PolymerUpdate, Korea JoongAng Daily, CNBC, Reuters, Korea Customs Service, Trading Economics, Korea National Oil Corporation.