For months, Korean news reports had spoken of trying to satisfy American demands for import reductions by cutting purchases 10 percent or 20 percent, so this decision has been a major shift and a major blow to Iran.
This is not a decision by the South Korea government but by the only two refiners who have been buying Iranian oil.
The Reuters news agency reported Monday that two sources told it that SK Energy, the country’s largest oil refiner, had decided to stop all imports. “SK Energy will not lift Iranian crude oil after lifting a 2-million-barrel cargo in early June,” one source told Reuters.
Last month, Reuters quoted industry sources as saying that Hyundai Oil Bank, the only other importer of Iranian crude, had also decided to halt Iranian imports from June.
Neither company has made any public remarks, neither confirming nor denying the published reports.
Last year, South Korea imported around 250,000 barrels a day from Iran or 10 percent of Iran’s oil exports.
South Korea has four oil refiners, but the other two have not imported Iranian oil.
The South Korean government has shied away from making any comments on the issue. The government does not want to get cross with the United States, on which it depends for defense, nor to offend Iran, which is a major market for all sorts of Korean exports.
Meanwhile, one of India’s major oil importers has reportedly gotten insurance from Iran to enable it to continue bringing Iranian oil to India by tanker. If Iran is prepared to offer insurance to others, that may loosen the impact of sanctions. It is the loss of insurance that seems to have had a major impact on oil traders.
The EU sanctions forbid the issuance of insurance or re-insurance for tankers carrying Iranian oil after July 1. About 95 percent of tanker voyages are re-insured in Europe. Single voyage insurance generally exceeds $1 billion a cargo because of the huge costs resulting from any oil spill. No insurance company can make that kind of offer without re-insurance.
Reuters reported Monday that sources in India told it that Mangalore Refinery and Petrochemicals Ltd. (MRPL) had been denied insurance in India and then approached Iran. It said MRPL got insurance from Iran for a tanker carrying 700,000 barrels of Iranian crude that docked in India last week.
The story did not name the Iranian insurer or give the size of the policy. It did say that the source reported future MRPL cargoes would be insured by Iran.