Moody's Investors Service said that South Korea's possible cut in imports of Iranian oil could hurt the country's refiners as it would result in higher costs for them. South Korea is weighing options to cut its reliance on Iranian oil in concert with US sanctions.

Mr Mic Kang VP at Moody said that "The potential cut in crude oil imports from Iran, the fourth largest supplier of crude oil would be credit negative to South Korea's refiners as they would incur higher costs.”

According to the credit rating agency's estimates, imported oil costs could rise 0.3% to 0.5% for top refiner SK Innovation and 0.4% to 0.9% for Hyundai Oil Bank, the fourth largest refiner, if the South Korean government bans imports from Iran.

Moody's said that the magnitude of the potential negative effects depends on the extent the oil companies cut imports of Iranian oil and secure alternative economical sources of crude oil.

While GS Caltex Corporation and S-Oil Corporation do not import crude oil from Iran, their operating performance could weaken as sanctions on Iran would put upward pressure on global crude oil prices and subsequently push up prices for refined products.

Last week, senior US officials visited South Korea and ratcheted up pressure on Seoul to cut its imports of Iranian oil. South Korea's foreign ministry said it has not decided yet on the US request to slash purchases of Iranian oil but expressed support for the objective of the US sanctions.

Official data showed that Iranian crude oil accounts for some 10 percent of South Korea's total crude imports. Last year, two way trade between South Korea and Iran jumped 60 percent from a year earlier to a record USD 18.5 billion.

(Sourced from www.tehrantimes.com)