South Korea mulls importing more Iranian oil

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The South Korean government is considering an offer made by Tehran that would allow the delivery of oil on Iranian tankers, effectively bypassing the US-led Western sanctions, Reuters reported.

Iran is finding it hard to maintain significant levels of oil exports, the nation’s primary source of income, since the US and Europe imposed harsh financial sanctions against insuring oil tankers coming from the Middle Eastern nation.

The Islamic Republic’s fleet of oil tankers is ageing due to decades-old sanctions imposed by the United States, making it tough to keep supplies flowing to its top two crude buyers.

“The South Korean government will not drag its feet, and the decision on importing oil from Iran will be made soon,” one source told Reuters.

According to AFP, South Korea imported 9.4% of all Iranian oil last year, or around 87 million barrels per day.

Oil and its derivatives account for about 80% of Iran’s exports and about half of government revenue. The estimate for the country’s 2010 revenue from net oil export is $73 billion. Now with sanctions in force, the export is likely to decline by 20% and 30%.

Iran is the second-biggest producer in OPEC after Saudi Arabia and produces about 3.3 million barrels a day. The full implementation of sanctions is likely to remove about 1 million barrels a day. Mohammad Ali Khatibi, Iran’s governor to OPEC, has warned the EU about “the consequences of politicising the market.”

The EU ban on insurance for ships carrying Iranian oil affects 95% of the world’s tankers because London-based International Group of P&I Clubs, which is adhering to the EU rule, insures them.

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