Industry minister hints at hike in U.S. oil imports to rein in trade surplus

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Industry minister hints at hike in U.S. oil imports to rein in trade surplus

Published: 02 Dec. 2024, 18:13 Updated: 02 Dec. 2024, 18:57

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

Minister of Trade, Industry and Energy Ahn Duk-geun speaks during a strategic meeting on natural gas development in Seocho District, southern Seoul, on Nov. 27. [YONHAP]

Korea’s minister of trade, industry and energy hinted at expanding imports of U.S. oil and gas in a bid to ease potential pressure from the incoming Donald Trump administration over the country’s growing trade surplus with the United States.

“As [U.S. energy sources] are much more competitive in terms of price compared to imports from the Middle East region, I believe there is enough room for state-run or private companies to expand imports,” said Minister Ahn Duk-geun during an interview with local media outlet Yonhap on Sunday.

“As there is a need to increase U.S. imports, the goal is to take a more constructive approach — for companies, in shaping business strategies, and from the ministry’s perspective, in devising policy measures,” Ahn added.

The comment by the minister is an official signal by the government indicating an expansion in energy imports from the United States through public utilities such as the Korea Gas Corporation and Korea National Oil Corporation, as well as private oil refiners.

Ahn suggested that a further diversification of import sources would also be beneficial in terms of energy security, as Korea has been highly dependent on crude imports from Middle East nations.

“There is a need for strategic diversification to enhance energy security, especially considering Korea’s heavy reliance on the Middle East and the ongoing armed conflicts in the region,” Ahn noted.

The move is part of an effort to mitigate potential pressure from the incoming U.S. government, as President-elect Trump has been vocal about reducing the United States’ trade deficits.

Korea posted the largest trade surplus with the United States among its partners this year. The country logged a bilateral trade surplus of $39.9 billion with its North American ally in the January-September period, larger than the total trade surplus of $36.8 billion during the same period last year, according to data from the Korea International Trade Association.

If the trend continues through the end of this year, Korea’s U.S. trade surplus is expected to surpass the $50 billion threshold, higher than the record $44.4 billion logged last year.

Korea already has been expanding its U.S. crude imports since the first Trump term.

The United States took up 17.25 percent of Korea’s total crude imports in the January-September period this year, making it the second-largest supplier following Saudi Arabia, according to data compiled by the Korea Petroleum Association. Member nations of the Organization of the Petroleum Exporting Countries accounted for 63.31 percent of total crude imports during the same period, with Saudi Arabia representing 31.48 percent.

Korea’s strengthened industrial ties with the United States, especially in advanced industries, can be used as leverage at the negotiation table, suggested Ahn.

“The Korea-U.S. relationship has evolved into what can be called as an economic alliance, and many Korean companies have been deeply involved in building an industrial supply chain and ecosystem in the United States through investments in advanced industries,” said Ahn.

"As the incoming administration is also prioritizing economic alliances centered on advanced industries, this can serve as a key factor moving forward.”

BY SHIN HA-NEE [[email protected]]