Exclusive: Korea ups Canadian crude imports amid uncertainties about tariffs and Middle East

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Exclusive: Korea ups Canadian crude imports amid uncertainties about tariffs and Middle East

Published: 04 Jul. 2025, 00:00

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

SK Innovation’s Ulsan Complex, measuring 2.5 million pyeong (2,042 acres), which began operation in 1964 as Korea's first oil refinery [SK INNOVATION]

More Korean oil refiners are ramping up Canadian crude purchases amid protracted uncertainties surrounding the Donald Trump administration’s erratic and capricious tariff policies.

The move aligns with Seoul’s broader strategy to diversify crude sources, as nearly 70 percent of its oil imports still come from the geopolitically volatile Middle East.

“Korea imported roughly 574,000 barrels of crude oil from Canada in May, and it was by SK Energy,” a government source who handles the country’s oil imports told the Korea JoongAng Daily.

It’s the first time SK Energy, an oil refining arm of SK Innovation, has imported Canadian oil since Trump took office in January. HD Hyundai Oilbank was the first oil refining company in Korea to import Canadian crude — 548,000 barrels — in April under the Trump administration.

It still accounts for only a small fraction of Korea’s overall imports, making up just 0.6 percent of the country’s total crude intake of 95.54 million barrels in May. Saudi Arabia was the largest supplier at 27.4 percent, followed by the United States at 19.6 percent.

“The Canadian crude was brought through a spot deal prompted by favorable pricing,” an SK Innovation spokesperson said, adding that it wasn’t under a long-term contract.

“Canada is among the countries the company turns to as part of its import diversification strategies,” the spokesperson said.

HD Hyundai Oilbank's oil refinery in Seosan, South Chungcheong [HD HYUNDAI OILBANK]

Korean refiners began seriously considering Canadian crude imports after U.S. President Donald Trump initially announced plans to impose a 25 percent tariff on Canadian imports. Although he exempted Canadian energy exports from the tariff list, including crude, domestic refiners have continued to diversify their supply sources in anticipation of Trump’s unpredictable, flip-flopping trade policies.

The increasingly volatile geopolitical landscape in the Middle East, exacerbated by the recent Israel-Iran conflict, has further reinforced the need for diversification. Iran’s parliament recently threatened to blockade the Strait of Hormuz — a critical chokepoint through which 99 percent of Middle Eastern crude bound for Korea must pass — following a U.S. strike on three Iranian nuclear facilities on June 21.

The favorable pricing of Canadian crude has further enhanced its appeal to Korean refiners. The price of Canadian imports was $66.34 per barrel, compared to $72.59 from the United States, $69.78 from Saudi Arabia and $69.07 from Iraq, according to data from the Korea National Oil Corporation.

SK Innovation’s Ulsan Complex, measuring 2.5 million pyeong (2,042 acres), which began operation in 1964 as Korea's first oil refinery [SK INNOVATION]

Canada is the world’s fourth-largest crude oil producer, currently pumping around 5 million barrels per day, with approximately 80 percent of that output for export, of which 95 percent flows to the United States.

"There remains a possibility that tariffs could be imposed in the future, should the United States adopt a unilateral reinterpretation or shift in policy stance,” said Kim Kwang-rae, a commodities analyst at Samsung Futures. “Should bilateral energy tariffs be imposed in the future, Korea’s major refiners could emerge as a key alternative export destination for Canadian crude.”

Korea’s reliance on Middle Eastern crude oil dropped to 62 percent in May, its lowest level since February 2022, though its imports rose 8.4 percent on month to 95.54 million barrels, according to data from the Korea National Oil Corporation.

Among non-Middle Eastern sources, the Americas accounted for 25.3 percent and Asia for 8 percent. The share of Asian crude reached its highest level since May 2023.

BY SARAH CHEA [[email protected]]