The likely return of Iranian oil is setting up what promises to be an aggressive battle to supply a corner of the coveted Asian market.
Iran is a major producer of condensates -- ultra-light oil that’s a by-product from natural gas fields -- and South Korea is Asia’s biggest operator of splitters designed to turn it into petrochemicals used to make plastics.
SK Innovation Co., Hanwha Total Petrochemical Co. and Hyundai Oilbank Co. used to favor Iran’s South Pars condensate due to plentiful supply and relatively low prices, but U.S. sanctions saw those flows dry up from 2019. The South Korean refiners then turned to condensates from Qatar and Australia, as well as West Texas Light crude and full-range naphtha from Europe and Africa.
With the Iranian nuclear accord possibly being revived by August, the Persian Gulf nation will be keen to win back its former customers. And while the battle for market share will be centered on Korean condensate buyers, it will also ripple through Asian markets for light crudes and naphtha.
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