U.S. Crude Oil Imports Down 45.6% Year-on-Year
Partial Refund on Transportation Costs for Non-Middle East Imports...Increased Imports from Russia and Norway
[Asia Economy Reporter Hwang Yoon-joo] The import routes of crude oil in South Korea have changed due to the impact of the novel coronavirus infection (COVID-19). Since 2016, imports of U.S. crude oil, which had been on the rise, have decreased to about half, while imports of Russian and Norwegian crude oil have increased this year.
According to the Korea National Oil Corporation on the 1st, the volume of U.S. crude oil imports dropped by 51.2%, from 13.415 million barrels in January last year to 6.541 million barrels in November. Compared to the same period the previous year (12.025 million barrels), it also decreased by 45.6%.
The reason for the decline in U.S. crude oil imports is the loss of price competitiveness. Since 2016, the domestic refining industry has increased imports of U.S. crude oil, which was priced lower than Middle Eastern crude oil. However, due to the impact of COVID-19, Middle Eastern crude oil prices plummeted, and the Oil Supply Price (OSP) applied to Asian export volumes was significantly lowered, making the import prices of U.S. and Middle Eastern crude oil (42 to 70 dollars) similar.
The places that took over the position of U.S. crude oil are Russia and Norway. When importing crude oil from regions other than the Middle East, part of the transportation costs can be refunded from the petroleum import surcharge. This is thanks to the government's policy to diversify crude oil imports to reduce the risk of U.S. sanctions on Iran.
As a result, during the same period, Russian crude oil imports increased by 27.0%, from 3.966 million barrels to 5.04 million barrels (3.622 million barrels). Norwegian crude oil imports, which were zero in January, rose significantly to 2.984 million barrels in November. This is the largest volume since July 2012 (4.146 million barrels).
Norwegian crude oil imports had been below 1 million barrels annually once every 2 to 3 years but began to surge last year. This is due to the transportation cost refund and the import price dropping from 68.5 dollars (February) to 43.8 dollars (November).
Cho Sang-beom, an official from the Korea Petroleum Association, explained, "U.S. crude oil has expensive transportation costs and its price competitiveness has greatly declined after COVID-19. Instead, crude oil imports from nearby Russia and Norway, which can receive transportation cost refunds, have increased."
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