South Korea switches to Russian crude to replace banned Iranian supplies

South Korea’s largest energy and chemical company, SK innovation, has boosted oil shipments from Russia and other exporters to offset Iranian condensate supplies it lost after the end of US sanction waivers.

“The share of Iranian condensate was high, but that has been replaced with crude oil from Russia, Kazakhstan and Qatar and we also have been diversifying our crude sources,” the company’s chief executive, Choi Nam-kyu, told journalists on Monday, according to Reuters.

Seoul had to find new suppliers after the latest round of US sanctions against the Islamic Republic, which hit the Iranian oil sector hard. The restrictions were re-imposed by the Trump administration after Washington unilaterally withdrew from the 2015 nuclear deal between Tehran and several world powers. Since then the US has been threatening to cut Iranian crude exports to zero.

Some crude importers, including China and Taiwan, India, Turkey, Greece, Japan, Italy, and South Korea were allowed to continue imports of Iranian oil. However, the US refused to renew the sanction waivers and since May 2 those who continue buying Iranian crude risk facing US sanctions.

South Korea was one of the largest buyers of Iranian condensate, which is an extremely light form of crude. It is mostly used for producing vehicle fuel, such as gasoline, or diluting heavier crude oils. South Korea started bracing for the lack of Iranian supplies last year, and spent around US$9 billion to buy and test some 23 different types of condensate from 15 countries, according to Reuters.