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LinkAsia | Jan 27
Over 85 percent of South Korea's crude oil imports come through the straight of Hormuz. Its closure would mean the price per barrel would double, d...
As the US and Western Europe pressure Iran to halt the development of nuclear weapons, proposed sanctions are escalating tensions and threatening to send the price of oil through the roof. Asian economies are bracing for the worst as they consider backing the US through sanctions. Here's MBC with the South Korean perspective.
Last year South Korea imported about 80 million barrels of crude oil from Iran, accounting for 10 percent of its imports. This supply is part of a long-term contract. It's not easy for us to replace Iran with other Middle Eastern countries. Because other oil producing countries like Saudi Arabia and the United Arab Emirates already have long-term export contracts with other countries.
Lee Dal-seok, Korea Energy Economics Institute:
If we don't import Iranian oil, it will be hard to find alternative oil.
Even if we find alternatives, cost is a problem. Last year, Iranian crude oil was about 102 dollars a barrel, 2 to 5 dollars a barrel less than crude from other Middle Eastern countries. If we replace Iran with other Middle Eastern countries, the oil industry predicts we will need to pay an additional 400 billon Korean won or 360 million US dollars. If oil supplies decrease due to a ban on Iranian imports, then global oil prices will increase, and domestic oil prices will fluctuate violently.
Lee Kwang-woo, LG Economic Research Institute:
The price of imported oil could increase. And this would inevitably have an impact on domestic oil products.