Korea Braces for Iranian Oil Ban

      June 27, 2012 12:50

      The government is trying to come up with ways of dealing with an EU ban on insurance of tankers carrying Iranian oil that begins in July. In a meeting on Tuesday, the government pledged to secure other sources for crude imports and protect domestic exporters.

      Last year, Korean oil refiners imported 87.18 million barrels of oil from Iran, accounting for 9.4 percent of total crude imports, so a halt in imports could make a serious dent in supplies. But the government and refiners say the impact will be negligible for the time being.

      Since early this year, Korea has gradually reduced Iranian oil imports and secured other sources including Kuwait and Qatar. The amount of Iranian oil imports from January to May decreased by 5.43 million barrel or 15.7 percent from a year earlier, while crude imports from Kuwait and Qatar grew by 10.02 million barrel (23.3 percent) and 5.33 million barrel (14.3 percent).

      But if the ban continues for a long time, Korea is likely to feel the pinch.

      The government hopes the ban will have a limited impact on fuel prices here as global oil prices have been on the decrease amid the global economic slump. The price of Dubai crude stood at US$89.15 a barrel on Friday, the first time it fell below $90 since December 2010. However, a prolonged ban of Iranian oil shipments is expected to push prices up again.

      A more serious problem is that small and mid-sized companies here who export products to Iran will be impacted heavily if the ban drags on. Of over 2,900 exporters doing business with Iran, more than 90 percent are SMEs. The government plans to help them shift export destinations.

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