South Korea stopped buying crude oil from Iran in August after its refiners lost insurance coverage on ships carrying the fuel from the Persian Gulf nation.
Purchases fell to zero last month, reducing imports from Iran for the first eight months of this year by 34 percent from a year earlier to 5.39 million tons, according to data posted on the Customs Service’s website today. South Korea bought 1.14 million tons of crude oil, or 36,738 tons a day, from Iran in August 2011.
South Korean refiners reduced Iranian crude purchases this year as the U.S. and European Union ratcheted up sanctions to pressure the Persian Gulf nation to halt a nuclear program that the U.S. and Israel say is aimed at developing atomic weapons. An EU ban introduced on July 1 prevented Korean refiners from insuring their tankers.
Iran offered to provide its own tankers to supply the oil, a South Korean government official said on June 29, asking not to be identified because the matter is confidential. SK Innovation Co., one of the two buyers of Iranian crude in the Asian country, said on Aug. 17 it would resume imports in September as it is near agreement on using Iran’s tankers.
The U.S. exempted South Korea, India and five other economies from its financial sanctions on oil imports from the Islamic Republic because they have demonstrated commitments to cut purchases of Iranian crude, Secretary of State Hillary Clinton said on June 11. India and Japan offered state-backed insurance for cargoes from Iran. Indian insurers have agreed to give as much as $100 million of cover per voyage, Shipping Corp. of India Chairman Sabyasachi Hajara said in August. In June, Japan’s parliament passed a bill to provide $7.6 billion of sovereign insurance for owners of tankers that carry Iranian oil.
Iran was the sixth-largest supplier of crude to South Korea last year, accounting for 9.4 percent of its overall oil purchases, Korean government data showed. Iran’s share in Korean oil imports fell to 6.3 percent as of the first eight months of this year.