The recently-voiced question of just how much patience Saudi Arabia will have for other OPEC members not pulling their weight under the cartel's oil cutback agreement has taken on an added gravitas with news that the kingdom is losing a significant share of South Korea's oil market to Iran.
Preliminary customs data published by the Oilprice show that Iran exported around 1.79 million tons of crude oil to South Korea in January 2017, double the normal amount.
By contrast, South Korea's imports of crude oil from Saudi Arabia dropped by 17.3 % in January compared to December 2016, to 785,084 barrels per day (bpd), because the kingdom is engaged in the OPEC cutbacks.
South Korea's total crude imports increased by 14 % annually to 2.93 million bpd in January, with Iran being the biggest beneficiary of the increased consumption (to the tune of a 147.7 % rise in exports).
Platts notes that Iran's exports in January rose by 3 % and is the only Middle Eastern producer to experience an increase last month as rival producers in Iraq, Kuwait, and the United Arab Emirates withstood a fall in loadings due to their participation in the OPEC cutback agreement.
But even though the nations cited by Platts may be playing ball, their contribution to OPEC is tenuous at best: Kuwait Oil Co. last week announced that it will raise the Gulf nation's capacity from its current level by 500,000 bpd, even if OPEC decides to extend the supply cuts beyond June.
Jamal Jaafar, CEO for state-run company, said: «We will continue to increase production capacity because we have a 5-year plan to reach 3.65 million barrels a day by 2021, so we can't stop investing in that; we will take advantage of the OPEC-cut deal to perform maintenance on facilities in the fields.»
Platts' mention of Iraq is also curious, considering the news agency earlier grouped it with Algeria and Venezuela as taking advantage of rather than contributing fairly to the cutbacks (Iraq pumped 4.48 million bpd in January compared to its 4.35 million bpd allotment).
Iraq too is preparing for a busy future, and last week its oil minister Jabar al-Luaibi announced plans to acquire a fleet of oil tankers to transport crude to global markets: «The ministry is keen to restructure ... by building and buying a large fleet of tankers.»
It is unclear what the main driver of the cutback deal, namely Saudi Arabia, thinks of these developments, but last week Herman Wang, OPEC specialist at S&P Global Platts, told CNBC that while the Saudis are doing the most to make the cutback agreement a success, «how long Saudi Arabia is willing to shoulder the burden of these cuts if it proves some of their cohorts are not fully complying with the deal remains to be seen.»