Sputnik – South Korea will be under pressure to import more oil and gas from the US, having ramped up Iranian imports in recent months to the displeasure of Washington.
Iran is one of the biggest oil exporters to South Korea and has steadily increased its exports since the lifting of sanctions associated with its nuclear program in January 2016.
Iran became the second largest oil exporter to South Korea in the first three months of 2017, delivering a record 18.54 million barrels, more than double the amount delivered over the same period a year ago.
“South Korea couldn’t bring crude from Iran for a while because of sanctions though it used a lot of Iranian crude in the past. But now as the sanctions are lifted… crude from Iran will keep flowing,” Kim Jae-kyung, research fellow at state-run Korea Energy Economics Institute, told Reuters last month.
In an interview with Sputnik Korea on Thursday, Kim Yeolmae, an analyst at Eugene Investment & Securities, said that the US is likely to continue to exert pressure on Iran, regardless of the results of elections there on May 19.
“If Rouhani’s government remains in power, the rapprochement between Trump and Saudi Arabia and Israel will lead to complications in the relationship with Iran.”
However, “if ultra-conservatives come to power after the presidential elections in Iran, the conflict between the Trump administration and Iran is likely to get worse,” Yeolmae warned.
While Trump has often criticized the nuclear deal the P5+1 group of countries signed with Iran, the US President is more likely to pressure Tehran than to tear up the agreement. This would enable the US to pursue its economic goals in the region, including replacing Iranian oil exports with its own.
“It’s highly likely that instead of terminating the nuclear agreement with Iran, Trump will start to exert pressure on Iran,” Yeolmae said.
“If the situation in the Middle East continues to be unstable, it’s beneficial for Saudi Arabia, whose company ARAMCO is preparing for an IPO, and for the US, which can provide itself with increased investment in energy infrastructure because of an increase in the oil price,” the analyst explained.
Iran, OPEC’s second-largest oil exporter, recently stepped up exports to three million barrels per day in March, for the first time since the 1970s.
Iranian oil exports to Asia have more than doubled since the lifting of sanctions. In December, imports of crude oil by Iran’s top for Asian buyers – China, India, South Korea and Japan – reached 1.89 million barrels per day.
India made over three times more purchases than a year earlier, while purchases by South Korea were up sevenfold.
Iran is also home to 18.2 percent of the world’s proven gas reserves, and plans to rival Qatar as the world’s largest LNG exporter.
President Trump’s eagerness to cause conflict with Iran can be better understood in the context of these economic considerations.
“China is the biggest potential market for Iranian oil and gas,” which puts Tehran on course for conflict with the US, since Washington also wants to increase its LNG exports and insisted on including LNG in a recent trade agreement with Beijing.
Yeolmae said that the relevance of Washington’s desire to export more oil and gas to the US ratcheting up of tensions in the Middle East and the Korean Peninsula is “obvious.”
“It’s hard to say that all this is being done for the same reason, but that subtext is clear to see in each case,” Yeolmae said.
Trump has lambasted the Iran nuclear deal as “the worst deal ever negotiated,” but in spite of his anti-Iranian rhetoric, last month the US State Department quietly admitted that Tehran is complying with the requirements to constrain its nuclear program.
In a letter to US House of Representatives Speaker Paul Ryan on April 18, Secretary of State Rex Tillerson wrote that “the conditions of Section 135(d)(6) of the Atomic Energy Act of 1954 (AEA), as amended, including as amended by the Iran Nuclear Agreement Review Act of 2015 (Public Law 114-17), enacted May 22, 2015, are met as of April 18, 2017.”