Iranian oil shipments back on the cards in Aug.

Iranian oil will be shipped to Korea once again as early as next month, according to a government source. Oil imports from Iran have been halted since June 25 due to the European Union’s ban on insuring Iranian oil shipments, as part of the EU’s broader sanctions against Iran for its nuclear program.

“Iran and local oil refineries are currently in talks to use Iranian tankers when delivering the oil shipments,” said a government official yesterday. “We have been informed that the talks are going well.” The two countries are currently negotiating the price of oil products, how they are going to insure the tankers and when the shipments will be loaded. The government source also said that some of the details have already been agreed, and there is a strong belief the talks will be wrapped up by the end of this month.

As it takes around 20 days for deliveries to be made, Iranian imports could start arriving in Korea by the middle of next month.

But industry sources said the local oil market has been ticking along nicely without the oil imports from Tehran, meaning there is no sense of urgency about the resumption of trade.

“As we’re still communicating [with Iran on the matter], it’s too soon to say that oil imports will resume from next month,” said an official in a related industry. “For the oil refineries, it is important to see how the details are going to be settled, as they will do business with whichever country offers the greatest benefits.”

Korea has been exempted from the U.S.-led sanctions on importing Iranian oil but says it cannot keep importing the fuel from the Middle Eastern country due to problems with reinsuring ships. Most reinsurance policies are issued by European companies, and the EU put a ban on insuring shipments of Iranian crude in July.

By Lee Sun-min, Yonhap [summerlee@joongang.co.kr]