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South Korea's KNOC Signs Oil Storage Agreement with Saudi Aramco

An Aramco engineer passes near a tank at the Ras Tanura oil refinery. (Reuters)
An Aramco engineer passes near a tank at the Ras Tanura oil refinery. (Reuters)
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South Korea's KNOC Signs Oil Storage Agreement with Saudi Aramco

An Aramco engineer passes near a tank at the Ras Tanura oil refinery. (Reuters)
An Aramco engineer passes near a tank at the Ras Tanura oil refinery. (Reuters)

South Korea’s state-run Korea National Oil Corp (KNOC) said on Monday that it has signed an oil storage agreement with Saudi Arabia’s oil giant Aramco to reserve 5.3 million barrels for five years, according to Yonhap News Agency.

The agreement announced in a press release posted on KNOC’s company blog was sealed as South Korean President Yoon Suk Yeol is visiting Riyadh for talks with Crown Prince Mohammed bin Salman and to attend other business events.

By storing Aramco’s oil in its reserves, KNOC said it would be able to enhance energy security.

Aramco was not immediately reachable for comment.

Yoon’s office said on Sunday that the oil will be stored at a reserve in South Korea’s southeastern port city of Ulsan, and the country has also secured the right to preferentially purchase the stored oil in case of emergency, as well as rental fees for the five-year period.

South Korea is the world’s fifth-biggest crude oil buyer, and Saudi Arabia is its number one provider.

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Oil Trims Gains on Dollar Strength, Tight Supplies Provide Support

FILE PHOTO: An oil pump jack is seen at sunset near Midland, Texas, US, May 3, 2017. REUTERS/Ernest Scheyder/File Photo
FILE PHOTO: An oil pump jack is seen at sunset near Midland, Texas, US, May 3, 2017. REUTERS/Ernest Scheyder/File Photo
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Oil Trims Gains on Dollar Strength, Tight Supplies Provide Support

FILE PHOTO: An oil pump jack is seen at sunset near Midland, Texas, US, May 3, 2017. REUTERS/Ernest Scheyder/File Photo
FILE PHOTO: An oil pump jack is seen at sunset near Midland, Texas, US, May 3, 2017. REUTERS/Ernest Scheyder/File Photo

Oil prices trimmed earlier gains on Wednesday as the dollar strengthened but continued to find support from a tightening of supplies from Russia and other OPEC members and a drop in US crude stocks.

Brent crude was up 21 cents, or 0.27%, at $77.26 a barrel at 1424 GMT. US West Texas Intermediate crude climbed 27 cents, or 0.36%, to $74.52.

Both benchmarks had risen more than 1% earlier in the session, but pared gains on a strengthening US dollar.

"Crude oil took a minor tumble in response to a strengthening dollar following news reports that Trump is considering declaring a national economic emergency to provide legal ground for universal tariffs," added Ole Hansen, analyst at Saxo Bank.

A stronger dollar makes oil more expensive for holders of other currencies.

"The drop (in oil prices) seems to be driven by a general shift in risk sentiment with European equity markets falling and the USD getting stronger," said UBS analyst Giovanni Staunovo.

Oil output from the Organization of the Petroleum Exporting Countries fell in December after two months of increases, a Reuters survey showed.

In Russia, oil output averaged 8.971 million barrels a day in December, below the country's target, Bloomberg reported citing the energy ministry.

US crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.

Despite the unexpected draw in crude stocks, the significant rise in product inventories was putting those prices under pressure, PVM analyst Tamas Varga said.

Analysts expect oil prices to be on average down this year from 2024 due in part to production increases from non-OPEC countries.

"We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024," BMI, a division of Fitch Group, said in a client note.