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Korea turns, cautiously, to Canadian crude for first time since Trump's return

Published: 02 Jun. 2025, 18:16 Updated: 02 Jun. 2025, 20:46

The Pacific Jade, a crude oil tanker, is seen at the Westridge Marine Terminal, the terminus of the Canadian government-owned Trans Mountain pipeline expansion project in British Columbia, Canada, on Aug. 25, 2024. [REUTERS/YONHAP]

Canadian crude oil has been imported to Korea for the first time since the launch of U.S. President Donald Trump’s second administration — a move seen as economically advantageous but still far from widespread adoption in the industry.

According to Petronet, a data platform operated by the Korea National Oil Corporation, Korea imported 548,000 barrels of Canadian crude in April valued at $82.3 million. The importer was HD Hyundai Oilbank. This marks the first shipment of Canadian oil to Korea since Trump was inaugurated in January.

However, the volume accounted for just 0.7 percent of Korea’s total crude imports that month, which stood at 80.68 million barrels. Saudi Arabia accounted for the largest share at 30.1 percent, followed by the United States with 18.5 percent.

The primary appeal of Canadian crude is the price. The average cost of Canadian oil imported in April was $69.77 per barrel on a cost, insurance and freight basis — lower than crude from the United States, which is priced at $77.50, and Saudi Arabia at $75.96.

“Canadian crude has become more cost-effective within North America, which led us to make the purchase,” said a representative from HD Hyundai Oilbank.

There are structural reasons why Canadian crude tends to be priced lower in global markets. Most of the country’s oil is produced in landlocked Alberta, making maritime exports difficult. In addition, Canada’s federal system has complicated efforts to build pipelines connecting Alberta to other provinces, limiting export options.

As a result, over 95 percent of Canada’s crude exports go to the United States, weakening its negotiating power. Its high sulfur content — typical of heavy crude — also contributes to its discounted price, due to factors such as increased difficulty in processing and transporting.

That landscape began to shift last year with the completion of a new pipeline linking Alberta to Vancouver, enabling easier access to Asian markets via the Pacific. China, embroiled in trade disputes with the United States, imported a record 7.3 million barrels of Canadian crude in March, signaling a push to diversify suppliers.

An oil pumpjack pumps oil in a field near Calgary, Alberta, on July 21, 2014. Pumpjacks are used to pump crude oil out of the ground after an oil well has been drilled. [REUTERS/YONHAP]

Korea, which relies on the Middle East for 60 to 70 percent of its oil imports, has also been exploring Canadian crude as a hedge against rising trade uncertainty.

Still, significant barriers remain before Canadian oil can become a reliable alternative. Canada’s export infrastructure is still developing, which could limit consistent supply. Moreover, despite early concerns, the Trump administration has not imposed tariffs on Canadian crude, and much of it continues to flow south.

"With so many external variables, we can’t base import decisions on price alone,” said an industry insider. “If the OPEC-Plus alliance increases production and global oil prices fall, Canadian crude could lose its pricing edge.”

HD Hyundai Oilbank also signaled a cautious approach.

“Rather than ramping up imports immediately, we plan to first assess whether Canadian crude is compatible with our domestic refining processes,” the company said.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY NA SANG-HYEON [[email protected]]