North Korea likely exceeded oil import limits set by the United Nations this year, according to a new report from the Royal United Services Institute (RUSI), after Pyongyang appeared to kick-start smuggling operations in May.

The development comes after months of little to no oil inflows, suggesting rising demand has put pressure on Pyongyang to dial up the covert trade.

According to the report, RUSI identified 23 ships making at least 36 deliveries to known oil terminals between May and November. The researchers estimate that North Korea imported between 556,000 and 667,000 barrels of refined oil during that time, assuming each ship was carrying at least three-quarters of its maximum capacity.

U.N. sanctions cap North Korea’s refined oil imports at 500,000 barrels per year, and all oil sold to the DPRK is supposed to be reported to the U.N.’s DPRK sanctions committee. Officially recorded imports for this year, however, sit at 38,000 barrels — just a fraction of RUSI’s estimates.

“Like all other global economies, North Korea is stimulating its economic activity as it emerges from the worst of the pandemic, and hence the demand for more fuel,” Neil Watts, a maritime expert and former member of the U.N. Panel of Experts (PoE), told NK News.

“Heating fuel and generator fuel becomes critical as winter sets in, which will also drive domestic demand,” he added.

Economists told NK News the influx of oil likely had a positive impact on the North Korean economy, which has weathered self-imposed COVID-19 restrictions and punishing international sanctions for years.

“The economy may not function properly without oil,” Kim Byung-yeon, an economics professor at Seoul National University pointed out, citing the fact that refined petroleum is critical for operating tractors and other implements in North Korea’s agricultural sector. At the same time, he cautioned that importing oil requires spending foreign currency, an increasingly rare commodity in Pyongyang.

North Korea has maintained tight control over goods moving to and from the country since early 2020, when the country enacted strict virus restrictions. According to the U.N. Panel of Experts (PoE), the measures knocked unofficial oil imports down to “very low levels compared to previous years.” 

The country’s border restrictions have also suppressed the flow of other consumer goods — including medicine, food stuffs and industrial inputs — from China, Pyongyang’s largest trading partner. 

Even with reduced oil imports, Kim Kyoo-chul, an associate fellow at the Korea Development Institute (KDI), said state-imposed restrictions on market activities and domestic travel had undercut demand for oil, resulting in relatively stable prices.

CHANGE OF STYLE, NOT SUBSTANCE

In the past, North Korea has imported refined petroleum from foreign-flagged vessels operated by companies not shy of skirting the international sanctions regime. But in what RUSI describes as a “striking feature” of recent deliveries, North Korea appears to be prohibiting foreign vessels from entering Nampho, likely as part of the country’s extreme anti-COVID-19 efforts.

“These [oil tankers] appear to undergo quarantine outside the West Sea Barrage before entering the port to unload cargo,” the report states, “significantly slowing delivery cycles and likely further impacting North Korean trade flows.”

The reports findings align with recent NK Pro analysis showing a noticeable uptick in vessels waiting outside of Nampho. 

According to the report, vessels spend as much as a month waiting outside Nampho before docking.

A recently constructed auxiliary oil terminal at Nampho also appears to be operational now, according to the report, with vessels seen docking at the quay multiple times over the last several months.

Activity at an auxiliary oil terminal (center) at Nampho between July and December this year | Image: Planet Labs PBH

It remains to be seen whether a regional uptick in COVID-19 cases will lead Pyongyang to about-face and reduce imports. Last month, authorities in the neighboring Chinese city of Dandong placed residents under de facto lockdown after just a handful of cases were detected, essentially dashing hopes of an imminent restart in land trade with North Korea.

Edited by Arius Derr