South Korea is increasing its reliance on US crude oil imports as the nation seeks to diversify its energy sources amid ongoing geopolitical tensions in the Middle East. The move comes as US officials encourage allies to purchase American oil, further bolstering trade relations and energy security.
“With potential disruptions to Middle Eastern crude imports, South Korea’s leading refiners, including SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank, are proactively diversifying their supply chains globally,” a trade official stated on Thursday. “US crude oil is emerging as a significant and growing alternative source.”
The official emphasized that US crude already represents a substantial portion of Korea’s oil imports and is anticipated to rise further in the coming months.
Historically, South Korea has depended heavily on Middle Eastern oil. However, strategic efforts to mitigate geopolitical risks have gradually lessened this reliance. The Middle East’s share of Korea’s total oil imports decreased from 86 percent in 2016 to 69.6 percent in the past year.
US crude oil has significantly filled the void. Its share of Korean imports has surged from a mere 0.21 percent in 2016 to 15.7 percent in 2024 and 16.3 percent the previous year. This increase followed the lifting of the US export ban in 2015 and the subsequent expansion of shale oil production. Furthermore, US efforts to promote domestic energy production have amplified this trend.
Among South Korean refiners, S-Oil, in which Saudi Aramco holds a major stake, maintains a substantial reliance on Middle Eastern crude. Conversely, GS Caltex and HD Hyundai Oilbank are actively securing US oil supplies, and SK Energy is also expanding its sourcing from the United States, according to industry sources.
Refiners are also exploring alternative sources, including crude oil from Africa, Australia, and Middle Eastern countries outside the Strait of Hormuz. “Options are not limited to the US, as companies must consider pricing, transportation costs, and other critical factors,” an industry insider noted.
Another source pointed out that the diversification towards US crude oil predates recent Middle East tensions. “Korean companies were already steadily increasing US imports before the current crisis. With supply risks on the rise, it’s natural that US crude has become a key alternative,” the source said.
The South Korean government’s strategic petroleum reserve (SPR) swap system supports US crude imports by mitigating the longer delivery times – approximately 50 days compared to around 14 days for Australian crude and 20 days for Middle Eastern supplies.
The SPR system allows refiners to borrow crude from government stockpiles using shipping documents as proof of incoming cargo and return the equivalent volume upon delivery. This ensures immediate supply without operational disruptions.
Korea’s increased intake of US crude oil also supports US objectives to increase energy exports. Highlighting this, US officials previously urged countries reliant on Middle Eastern energy – particularly those accessing it via the Strait of Hormuz – to “buy American oil.”
Earlier on Thursday, Yang Ki-wook, Deputy Minister for Industrial Policy and Security at the Industry Ministry, stated that the government is investigating alternative supply routes that circumvent the Strait of Hormuz. These routes include sourcing crude oil from the US, Saudi Arabia, Oman, and Kazakhstan, as well as naphtha from Algeria and Greece.
He further added that the government and industry are collaborating to match demand with available supply while assessing the viability of each potential option.
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