South Korea announced Tuesday it will suspend all imports of Iranian oil from 1 July amid a European Union (EU) insurance ban on vessels carrying the product.
The insurance ban is part of a series of measures taken by the EU and the US to hurt Iran's oil exports. South Korea is the first major Asian economy to halt oil imports from Iran, South Korean (Yonhap) news agency reported today.
"The country, too, has to suspend oil imports from Iran as the European Union (EU) is set to stop offering any type of insurance on Iranian oil imports while also suspending oil imports from Iran itself from July 1," the Korean Ministry of Knowledge Economy said in a press release.
Currently, European firms cover 100 % of protection and indemnity insurance on all Iranian oil shipments to South Korea, according to the ministry.
South Korea purchased 9.4 %, or about 87 million barrels, of all its oil imports from Iran last year, but the government said the scheduled suspension of oil imports from the Middle Eastern country will not greatly affect the country's economy.
"The government has been in active and continuous dialogue with other oil exporting nations to secure alternative sources of oil," the ministry said. "It will continue its efforts to help minimize the impact on the country's economy and businesses."
"Iran is our third-largest market in the Middle East, and therefore continued cooperation with Iran is important to our economy," Moon told a press briefing.
South Korea's exports to Iran shot up 32 % on-year to US$6.07 billion in 2011 with shipments to the Middle Eastern country in the first five months of this year soaring 40.5 % from the same period last year to $2.9 billion.
"The government will continue to maintain a close watch on the country's oil supplies while also continuing its cooperation with the international community," the ministry said.
Oil is a major source of revenue for Tehran and the EU and US have been trying to use it as a tool to persuade Iran to give up its nuclear program.