Resumption of US oil export a boon to Korean industries

By Choi Sung-jin

The U.S. decision to resume oil exports after a 40-year hiatus is expected to benefit Korea’s refining and petrochemical industries, industry sources said Monday.

The domestic oil refineries, which depend heavily on Middle East crude, will be able to pressure suppliers, the sources said. Petrochemical companies that use condensates, such as SK Energy and Hanhwa Total, will also benefit from cheaper prices of materials.

The U.S. government, which has banned the export of its oil since 1975 after the first oil shock, will lift the embargo as early as Dec. 22, because both houses have approved a related bill and the While House is unlikely to veto it.

However, industry sources say it will be difficult for Korean industries to increase imports from the U.S., because of insufficient infrastructure and consequent uncertainty in commercial viability. But the appearance of the U.S. oil itself will put pressure on the Middle East producers that have supplied oil at higher prices to Korea and Japan by applying the so-called Asian premiums.

“In a best-case scenario, we can expect the Middle East countries will lower their supply prices or cut transport costs,” an analyst said.