September 10, 2018 / 6:17 PM / 7 months ago

U.S. crude deliveries to South Korea to hit record high in November

HOUSTON, Sept 10 (Reuters) - U.S. crude deliveries to South Korea are poised to reach a record in November, Thomson Reuters trade flows data show, as buyers there pull back from Iranian crude to comply with sanctions reimposed on Iran by the United States.

The escalating U.S.-China trade row has also helped push U.S. crude into South Korea, with U.S. exporters seeking alternative buyers in Asia - including in South Korea, India, Japan and Taiwan - as China’s purchases fall. Only one crude tanker is scheduled to depart from the United States in September for China, previously a top U.S. crude buyer.

A dozen tankers carrying more than 21 million barrels of U.S. crude are underway or scheduled to depart for South Korea between Sept. 11 and Nov. 27, more than the previous seven months combined, the data show.

U.S. crude arriving in South Korea, the world’s fifth-largest crude importer, will hit a record 269,000 barrels per day (bpd) in November, up from 229,000 bpd in September and 221,000 bpd in October, the data shows.

South Korea, one of Iran’s top crude customers, last month cut its Iranian crude acquisitions to zero, according to the data, while it sought waivers from the U.S. sanctions.

“The U.S. needs to push out exports or it will start to build inventories at home,” said Olivier Jakob, managing director of consultancy PetroMatrix. “Exporters need to seek alternative buyers because the U.S. still needs to maintain a high level of exports.”

The C. Challenger, carrying more than 2 million barrels of Light Louisiana Sweet WTC-LLS crude, is scheduled to reach Yeosu, on South Korea’s southern coast, on Oct. 2. The Baghdad, also carrying 2 million barrels of the U.S. coastal grade, departed from the Galveston Offshore Lightering Area and is expected to reach Ulsan in southeastern South Korea on Oct. 10, the trade flows data show.

Other Asian countries also are buying more U.S. crude. A record amount will flow in September to Japan, with its imports of U.S. crude are set to reach 138,000 bpd this month. Taiwan’s August purchases of U.S. oil hit a record 245,000 bpd, the data show.

“Asian demand is still relatively strong, and those countries have a tendency politically to favor diversification (of crude suppliers) when you have trade wars,” Jakob said. (Reporting by Collin Eaton)

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