Seoul, Riyadh discuss cooperation on energy

The two countries have agreed to work as partners based on "mutual trust," the ministry said in a press release.

Korean Minister of Trade, Industry and Energy Lee Chang-yang held a video conference with the Saudi Energy Minister Abdulaziz bin Salman Al Saud, a Saudi royal, in June. [MNISTRY OF TRADE, INDUSTRY AND ENERGY]

Korea and Saudi Arabia's governments discussed stronger cooperation in energy.

According to the Ministry of Trade, Industry and Energy on Wednesday, Trade Minister Lee Chang-yang held a video conference with the Saudi Energy Minister Abdulaziz bin Salman Al Saud, a Saudi royal, to discuss stabilizing the international crude oil market.

The two countries have agreed to work as partners based on "mutual trust," the ministry said in a press release.

The OPEC plus group, which also includes Russia, decided last month to cut production by 2 million barrels a day.

Korea imports the largest portion of its crude oil from Saudi Arabia. According to the government, in the first seven months of this year, crude oil imported from Saudi Arabia amounted to 186 million barrels, which accounted for 31.1 percent of its total.

The U.S. is the second-largest supplier accounting for 13.1 percent.

Crude imported from Saudi Arabia for all of 2021 amounted to 281 million barrels, 29.3 percent of all crude imports.

The discussion took place as international oil prices have been rising for three consecutive trading days with forecasts of additional increases through the first quarter of next year.

Goldman Sachs on Monday projected crude oil to break $115 per barrel in the first quarter 2023.

“You have a relatively tight supply situation going into 2023 that we think will create significant upside,” Jeff Currie, Goldman Sachs’ commodities research head, told CNBC.

As of Tuesday, West Texas Intermediate was trading around $88 per barrel, while Dubai crude was trading at $91 and Brent $95.

The strong U.S. dollar has also affected Korea’s trade, which has seen deficits for seven straight months, the longest stretch since the Asian financial crisis in the late 1990s.

Rising costs of energy imports have widened the trade deficits.

In the first 10 months of this year, Korea imported $158.7 billion in energy products including crude oil, an 82 percent rise over a year earlier.

Korea imported $87,5 billion worth of crude oil in the first 10 months of this year, up 68 percent on-year.

During their video conference, the Korean and Saudi ministers agreed to strengthen cooperation in hydrogen energy.

The Saudi royal asked for Korean companies to participate in a Global Supply Chain Resilience Initiative that he announced last month.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]