S. Korean refiners concerned over possible Iranian oil embargo

SEOUL, Jan. 11 (Yonhap) -- South Korean refiners are concerned that a move by the United States to sanction Iran could disrupt oil supply and lead to higher petroleum product prices, industry sources said Wednesday. Iranian crude oil accounted for 9.77 percent of the 845.68 million barrels of crude the country imported in the first 11 months of last year, according to the sources. Currently, SK Energy Co. and Hyundai Oilbank Co. buy oil from Iran. "The government has been cautious about joining U.S.-led sanctions, but because Washington's stance on penalizing Tehran for its alleged nuclear weapons program is strong, the situation is very fluid," an insider who declined to be identified said. Seoul said over the weekend that it may consider measures to reduce the country's dependence on Iranian oil to 2010 levels for the new year. In that year Iranian oil accounted for 8.33 percent of all imports. "If South Korea has to buy oil from another country such as the United Arab Emirates (UAE) local refiners may have to pay US$41.45 million more per year for crude imports and readjust refining facilities, which can take time and money," the source said. The extra cost calculation is based on the price difference between crude oil from Iran and other Middle East countries, such as the UAE, Saudi Arabia and Kuwait. In addition, local refiners will have to sign new import deals with other suppliers and hold talks with shipping companies to bring in the oil, all of which translates into higher costs. If sanctions are imposed, this could lead to a reduction in global supply and push up overall prices, watchers said, adding such developments will raise consumer prices and exert negative influence on South Korea's efforts to control inflation this year. (END)