South Korea, the fourth largest importer of Iranian crude, plans to resume purchases after a two-month pause due to a European Union embargo.
South Korean refiners and the National Iranian Tanker Company (NITC) are negotiating the details of a deal, which would allow supplies to restart from September, Reuters reported citing government sources. Tehran offered to deliver crude in its own tankers and provide up to $1 billion shipment insurance cover.
SK Energy and Hyundai Oilbank – the only two South Korean refiners that import Iranian crude, have confirmed that they are involved in negotiations with NITC. Though it’s unclear whether Iran had offered South Korea a discount for crude.
South Korea, India, Japan and China are the biggest importers of Iranian crude, accounting for more than half of its oil exports. In May, Seoul announced it would halt crude import from the Islamic Republic, becoming the first major importer of Iranian oil to give up supplies due to the EU sanctions.
EU sanctions banning Iranian oil as well as insurance affect Asian customers as they rely on EU companies to insure their shipments. Nearly 90% of the world’s tanker fleets are covered by 13 international P&I clubs from the EU.
Meanwhile Japan approved providing $7.6 billion insurance coverage for Iranian tankers, while China offered to use its own vessels for delivery. India has given permission to its state-run refiners to import Iranian oil on condition Tehran arranges insurance.