South Korean oil stocks surge on rising refining margins

South Korean oil refining stocks, including S-Oil, GS, and SK Innovation, saw significant price increases due to rising refining margins and expectations of improved earnings. S-Oil's stock rose over 7% as market sentiment improved following a decline in the Saudi Arabian Official Selling Price (OSP) and rising international crude oil prices.

Analysts attribute the strong refining margins to global supply disruptions caused by conflicts in the Middle East and Ukraine. These geopolitical tensions have impacted approximately 12% to 14% of global petroleum product production. Additionally, S-Oil's complex refining margin for the second and third quarters is projected to exceed $41 per barrel, surpassing major US competitors like Valero.

Yuanta Securities has raised its target price for S-Oil to 205,000 KRW, forecasting strong momentum for the second half of the year. The firm expects S-Oil to achieve an annual operating profit of approximately 5.2 trillion KRW.