By Chung Min-uck
The United States will give South Korea a waiver and allow it to continue importing crude oil from Iran, without being subject to sanctions, the foreign ministry said Wednesday.
A ministry official said a formal announcement will be made later this week.
He said Korea and the U.S. completed their consultations and are now fine-tuning the details. Korea is the fourth largest Iranian oil importer. The country provides around 10 percent of Korea’s crude imports.
The U.S. is leading international sanctions against Teheran over its nuclear program that is suspected of being used to build atomic weapons.
“Washington is likely to announce Korea’s waiver from U.S. sanctions on Iran within this week,” said the official. “Washington has already agreed to Korea’s request for an exemption.”
Together with Seoul, around a dozen countries are expected to get a waiver.
Seoul has been exerting efforts to be excluded from the U.S. sanctions list on Iran. Washington earlier decided to impose financial sanctions on countries that import Iranian oil beginning June 28 based on the National Defense Authorization Act. Teheran is under growing international pressure over its nuclear program.
The official said Seoul was able to get the waiver as domestic refiners that import oil from Iran — SK Innovation and Hyundai Oilbank — voluntarily cut their reliance on Iranian oil.
For the same reason, 11 other countries including Japan, Germany and the United Kingdom were exempted in March.
Korea reduced its oil imports from Iran by 30 percent in the first quarter.
Reportedly, Washington has requested a reduction of around 20 percent year-on-year.
However, obstacles remain as the EU plans to push ahead with an insurance ban on oil shipments from Tehran beginning July 1.
Ninety percent of Asian nations’ oil shipment insurance is financed by European companies. If imposed, domestic refiners that import Iranian oil are likely to suffer deep cuts in profit.
The EU earlier said there will be no exceptions in its sanctions over Iran’s suspected nuclear arms development while Seoul, Tokyo and many other countries are lobbying for exemption.
Meanwhile, at a meeting held in Baghdad last week between Iran, five permanent members of the UN Security Council — the U.S., China, Russia, the United Kingdom and France — and Germany failed to reach an agreement on the nuclear issue. They plan to meet again in Moscow on June 18 and 19.
According to Moody’s Investor Service, a U.S.-based credit rating agency, Korea’s possible cut in imports of Iranian oil could result in a rise of the cost of SK Innovation and Hyundai Oil Bank’s oil imports by 0.3 to 0.5 percent and 0.4 to 0.9 percent, respectively.