South Korean refiners plan to resume buying crude from Iran in September after a two-month hiatus due to a European Union embargo that made shipping the oil difficult, government and refining sources said Wednesday.
The refiners have, like their Chinese and Indian counterparts, asked Iran to deliver crude on Iranian tankers, government and industry sources said. This shifts the responsibility to Iran for insurance, sidestepping a ban in the EU on insurers from covering Iranian shipments.
Iran has a major interest in keeping its crude flowing to South Korea, China, India and Japan because they are its top four customers. They buy more than half of its oil exports.
They have slashed Iranian purchases this year, though, under pressure from EU and U.S. sanctions that aim to squeeze Tehran’s oil income and curb its nuclear program. The West suspects Iran wants to develop weapons, which Tehran denies.
Sources said Iran’s crude exports dropped to about 1.1 million barrels per day in June and July from more than 2 million bpd at the start of the year. At current prices, the lower volume means the loss of some $110 million a day in export earnings.
Japan and South Korea, Iran’s third- and fourth-biggest oil buyers, both halted imports in July as they scrambled to work out how to continue imports under the EU sanctions, which have made it tough to ship, insure and pay for Iranian oil.