Refiners in South Korea, the world’s fifth crude oil importer, have joined India to diversify their crude sources in what potentially could impact on Nigeria’s spot crude export market.
South Korea’s largest refiner, SK Innovation, is the latest to have made its first purchase of US crude after two of India’s state-run refiners, last week, placed order for over 1 million barrels for the first time.
“We have purchased 1 million barrels of West Texas (WTI) grade,” SK Innovation spokeswoman, Kim Woo-Kyung, told Platts.
The cheaper and attractive price offerings for US WTI crude following the OPEC-led output cuts since January has enabled the US crude grade to find a non-traditional home in Asia.
Nigeria produces light sweet crude, a similar grade with the US WTI, that refiners in Asia are now rushing because of favourable price and shorter shipping distance.
At least three of South Korea’s four refiners import crude from Nigeria; mostly through spot cargoes, Korean shipping data have shown.
But with Korea looking to add to its list of crude suppliers, Nigeria’s barrels heading to the Asian country may further shrink.
Exports to India, Nigeria’s number one crude oil buyer, and far East Asian countries like Indonesia and Singapore, may also struggle to have a strong footing.
Last week, state-run Indian Oil Corporation (IOC) said it had concluded plans to import 1.6 million barrels from the US, making IOC the first state-run refinery in India to buy US crude.
“Today, Indian Oil bought the second cargo of 1.9 million barrels of crude oil from the USA,” IOC tweeted on Thursday.