July 6, 2018 / 3:32 AM / 4 months ago

South Korea suspends Iranian oil loading in July for first time since 2012 - sources

SEOUL/TOKYO (Reuters) - South Korea will not lift any Iranian crude and condensate in July, halting all shipments for the first time in six years amid U.S. pressure to cut all imports of Iranian oil from November, three sources familiar with the matter said on Friday.

FILE PHOTO: A gas pump is seen hanging from the ceiling at a petrol station in Seoul June 27, 2011. REUTERS/Jo Yong-Hak/File Photo

Japanese customers, however, are continuing to import for now, with multiple buyers considering buying Iranian oil through September loading, said a North Asia trading source familiar with Iranian oil shipping arrangements.

The move by South Korea, one of Iran’s main customers in Asia along with China and Japan, comes as it is in talks to seek an exemption from U.S. curbs on buying Iranian oil, in line with a waiver it received during previous sanctions.

“There was pressure from the South Korean government to halt purchases,” said the source familiar with Iranian shipping arrangements. “South Korea overall is lifting zero oil (from Iran) for July loading.”

Two other sources said South Korea cancelled July loadings of crude and condensate cargoes from Iran as it was uncertain whether the country would receive an exemption from U.S. sanctions on Iran trade.

The cancellations mean South Korea will import no Iranian oil in August, the first month of zero imports since August 2012 when South Korean buyers put Iranian oil purchases on hold before getting a waiver to import limited amounts of Iran crude.

The United States in May said it was walking away from an international deal on Iran’s nuclear programme. In late June, it demanded its allies halt all imports of Iranian oil from November and said exemptions were unlikely.

South Korean refiners have since curtailed their Iranian oil purchases and turned to alternative sources such as American and African crude due to expensive Middle East grades and uncertainty over trade with Iran.

South Korean buyers of Iranian crude and condensate are SK Energy and SK Incheon Petrochemical, owned by SK Innovation (096770.KS), Hyundai Oilbank Corp [INPTVH.UL] and Hanwha Total Petrochemical Co [SMCHE.UL].

Japan, which reduced Iranian oil imports significantly during the previous Western sanctions on Tehran that were lifted in 2016, is also seeking an exemption from the latest U.S. sanctions on Iran.

“Japanese buyers also nominated cargoes for August, though they were not allowed to buy additional crude on top of term contractual volumes,” the shipping source said.

Japanese oil refiners may have to stop loading Iranian crude oil from Oct. 1 if the government does not secure another exemption, the president of the Petroleum Association of Japan (PAJ) said last month.

Reporting By Jane Chung in SEOUL and Osamu Tsukimori in TOKYO; additional reporting by Florance Tan in SINGAPORE; editing by Richard Pullin

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