28 Mar 2024
Sunday 14 May 2017 - 10:53
Story Code : 260794

Iran ramps up oil exports to South Korea, much to Trump's chagrin

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 ofthe biggest oil exporters toSouth Korea and has steadily increased its exports sincethe lifting ofsanctions associated withits nuclear program inJanuary 2016.


Iran became the second largest oil exporter toSouth Korea inthe first three months of2017, delivering a record 18.54 million barrels, more thandouble the amount delivered overthe same period a year ago.

"South Koreacouldn't bring crude fromIran fora while because ofsanctions though it used a lot ofIranian crude inthe past. But now asthe sanctions are lifted crude fromIran will keep flowing," Kim Jae-kyung, research fellow atstate-run Korea Energy Economics Institute, told Reuters last month.

In an interview withSputnik Korea onThursday, Kim Yeolmae, an analyst atEugene Investment & Securities, said that the US is likely tocontinue toexert pressure onIran, regardless ofthe results ofelections there onMay 19.
"If Rouhani's government remains inpower, the rapprochement betweenTrump and Saudi Arabia and Israel will lead tocomplications inthe relationship withIran."


However, "if ultra-conservatives come topower afterthe presidential elections inIran, the conflict betweenthe Trump administration and Iran is likely toget worse," Yeolmae warned.

While Trump has often criticized the nuclear deal the P5+1 group ofcountries signed withIran, the US President is more likely topressure Tehran thanto tear upthe agreement. This would enable the US topursue its economic goals inthe region, including replacing Iranian oil exports withits own.
"It's highly likely that instead ofterminating the nuclear agreement withIran, Trump will start toexert pressure onIran," Yeolmae said.


"If the situation inthe Middle East continues tobe unstable, it's beneficial forSaudi Arabia, whose company ARAMCO is preparing foran IPO, and forthe US, which can provide itself withincreased investment inenergy infrastructure because ofan increase inthe oil price," the analyst explained.

Iran, OPEC's second-largest oil exporter, recently stepped upexports tothree million barrels per day inMarch, forthe first time sincethe 1970s.

Iranian oil exports toAsia have more thandoubled sincethe lifting ofsanctions. In December, imports ofcrude oil byIran's top forAsian buyers China, India, South Korea and Japan reached 1.89 million barrels per day.

India made overthree times more purchases thana year earlier, while purchases bySouth Korea were upsevenfold.

Iran is also home to18.2 percent ofthe world's proven gas reserves, and plans torival Qatar asthe world's largest LNG exporter.

President Trump's eagerness tocause conflict withIran can be better understood inthe context ofthese economic considerations.
"China is the biggest potential market forIranian oil and gas," which puts Tehran oncourse forconflict withthe US, sinceWashington also wants toincrease its LNG exports and insisted onincluding LNG ina recent trade agreement withBeijing.


Yeolmae said that the relevance ofWashington's desire toexport more oil and gas tothe US ratcheting upof tensions inthe Middle East and theKorean Peninsula is "obvious."


"It's hard tosay that all this is being done forthe same reason, butthat subtext is clear tosee ineach case," Yeolmae said.


Trump has lambasted the Iran nuclear deal as "the worst deal ever negotiated," butin spite ofhis anti-Iranian rhetoric, last month the US State Department quietly admitted that Tehran is complying withthe requirements toconstrain its nuclear program.

In a letter toUS House ofRepresentatives Speaker Paul Ryan onApril 18, Secretary ofState Rex Tillerson wrote that "the conditions ofSection 135(d)(6) ofthe Atomic Energy Act of1954 (AEA), asamended, including asamended bythe Iran Nuclear Agreement Review Act of2015 (Public Law 114-17), enacted May 22, 2015, are met asof April 18, 2017."
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