Oil traders are turning their focus to a potential trade agreement between South Korea and some major Persian Gulf producers that may reduce prices of Middle Eastern crude in the months to come.

South Korea’s trade ministry has signed an agreement to resume free-trade agreement negotiations with Gulf Cooperation Council members for the first time in about a decade, according to a statement on its website. While any agreement remains some way off, traders are already paying close attention to a possible deal that may remove or lower a 3% levy imposed on imported crude, possibly boosting the Asian nation’s intake from the oil-rich region. 

The GCC groups powerhouse Saudi Arabia, as well as the United Arab Emirates, Bahrain, Kuwait, Oman and Qatar, who’ve benefited from oil’s rally to a seven-year high as global demand recovers. South Korea, Asia’s fourth-largest oil consumer, took about two-thirds of its crude supplies from the GCC region in 2020, according to the trade ministry. The two sides had three rounds of negotiations in 2007, but they were then put on hold in January 2010.

Still, an official from the Ministry of Trade, Industry and Energy cautioned that it’s too early to predict the potential implications. South Korea and GCC member countries will go through each traded item where taxes vary, the official said, asking not to be identified as the discussions are private.

While South Korea’s baseload for refinery feedstock is from the Middle East, the country has attempted to diversify sources of oil imports in the past years by offering freight rebates for non-Middle Eastern crude on top of free trade pacts with some nations such as the U.S. 

That approach has made long-haul crude more attractive in terms of overall pricing than before. For American crude, the nation’s imports increased more than 20% in the first 10 months of last year, compared with the same period in 2020, according to U.S. Energy Information Administration data.