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Saudi oil price cut favorable to Korean oil refiners

Saudi Arabia’s recent price cut for oil exports to Asia is likely to be favorable to South Korean oil refiners, industry insiders said Thursday.

Saudi Aramco, the state-owned oil giant, recently lowered official prices for the crude it plans to sell to Asia for June by $0.40 per barrel, while it raised prices for other regions.

The move was interpreted as trying to defend sales in the Asian market amid the ongoing price competition among oil producers, according to news reports. Korea, Japan and China are among the top five oil importers.

(Yonhap)
(Yonhap)

Aramco’s decision came amid South Korean refiners seeking to diversify import channels.

Korean refiners have been relying on oil imports from the Middle East than US, North Africa and Europe due to geographic proximity and lower logistics costs. But oil from the Middle East recently became less competitive in terms of price, after the countries in the region agreed to reduce production capacity.

SK Innovation, for instance, imported Russian Urals oil for the first time in 10 years in the first quarter.

“We have reduced the portion of long-term import of crude oil to under 50 percent, unlike other refiners,” a SK Innovation official told Yonhap News Agency.

“The decision came as we are now capable of dealing with market variability over oil products.”

By Shim Woo-hyun (ws@heraldcorp.com)

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