February 12, 2025 [Korea Joongang Daily]- Korean oil refiners are actively mulling the importation of Canadian crude oil, possibly at slashed prices, looking to take advantage of U.S. President Donald Trump’s proposed hefty 25 percent tariff on Canada that could leave the country with no alternative but to send some of its stock to Asia.
Currently. Canada exports most of its crude oil to the United States, and if the steep tariff is imposed, it will have to find other sources of demand.
The price of Canadian crude oil, which cost $65 a barrel before Trump’s inauguration, fell to some $58 per barrel as of Feb. 6, cheaper than U.S. West Texas Intermediate crude at $70.61 a barrel and Dubai crude at $77.43 a barrel.
“We are planning to adopt Canadian oil as some quantities may flow to Korea, when we can have a chance of securing crude oil at cheaper prices,” said Joo Yeong-kyu, the head of the management and strategy division at SK Energy, during the company’s earnings conference call on Thursday.
The scenario may help domestic refiners’ increase their refining margin, a key indicator of the profitability of oil refineries. If production costs for U.S. refiners rise, the cost oil products such as gasoline and diesel may increase, which will eventually lead to an improvement in profit margins.
“Trump’s planned tariff on Canada will be a good opportunity for Korean oil companies. With the new tariff rule, U.S. oil companies may have to suffer a fall in operation rates, and that will boost the prices of oil,” HD Hyundai Oilbank said during a conference call on Feb 6.
“Some Canadian crude oil will also be supplied to Korea, benefiting domestic firms that search for intermediate crude.”
Trump’s whims, however, remain an unpredictable variable.
The new U.S. president signed an executive order imposing an additional 25 percent tariff on imports from Canada and Mexico on Feb. 1, but has postponed the implementation by 30 days after negotiating a border deal. An additional 10 percent tariff on Canadian oil has also been delayed.
Experts urge Korea to strongly consider accepting crude oil from Canada not just because of the tariff issue, but also to diversify the supply chain amid looming geographical risks.
“It is necessary for local oil refiners to consider importing Canadian oil to reduce its dependence on Middle East crude,” said Kim Tae-hwan, an oil policy researcher at the Korea Energy Economics Institute. “It should be decided after watching the situation carefully to see the amount of Canadian oil sent beyond the United States after the tariff imposition.”
Korea imports up to 70 percent of its crude oil from the Middle East, with Saudi Arabia standing the biggest partner as of last year. Korea imported 4,789 tons of crude oil from the country, almost 35 percent of its total imports.
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