South Korean refineries are increasing their crude oil imports from the United States. This trend is likely to accelerate as the price of crude oil from the United States is currently much lower than that of Middle Eastern crude oil.
According to industry sources, the amount of the American crude oil imported by Korean refineries totaled 13.75 million barrels in the first half of this year, more than the 13.43 million barrels they imported in 2017 as a whole. SK Innovation imported approximately eight million barrels in the first half and GS Caltex imported 4.75 million barrels for the first five months of this year. GS Caltex's import amount is estimated to reach 5.75 million barrels at the end of this month.
The main reason for the increase in oil imports from the US is a widening price difference in comparison with Middle East crudes. In addition, Korean refineris are replacing condensate from Iran with American crude oil amid U.S. economic sanctions on Iran. Another factor is an increase in demand for light crude oil, which is more suitable for paraxylene production, as Korean refineries are beefing up their chemical business.
South Korean oil companies are likely to import even more from the United States in the second half. The price gap between Dubai and WTI increased from US$1 to US$2 per barrel to US$7 to US$8 per barrel between March and this month.
SK Innovation and GS Caltex are planning to import at least four million and six million barrels from the United States in the third quarter, respectively. Hyundai Oil Bank, which has imported no crude oil from the U.S., is considering following suit.