Korean Refineries Thrive Amid Middle East War Crisis
Korean refineries led a record improvement in performance during Q2 2026, despite the chaos of Middle East conflicts hitting global supply chains. This 'earnings surprise' was spearheaded by lubricating base oils, which saw their profitability surge due to shortages caused by war damage to facilities in the region.
The Pearl GTL facility in Qatar's Ras Laffan Industrial Complex suffered severe damage, resulting in the suspension of production that had handled approximately 30% of global Group 3 lubricating base oil supply. As a result, lubricating base oil spreads surged 2.5 times to the $180s from the low $70s per barrel a year earlier.
Domestic refineries seized this crisis as an opportunity and advanced. SK Innovation recorded Q2 operating profit of 3.4873 trillion won, achieving a significant turnaround from operating losses of 401.6 billion won in the same period a year ago. SK Enmoils, which handles the lubricant business, led the performance improvement with a 414.4% increase in operating profit to 691.9 billion won.
The issue is not just short-term windfall gains, as state-owned Qatar Energy mentioned 'the possibility of requiring over one year for Pearl GTL recovery,' declaring force majeure. Lee Dong-wook, a researcher at IBK Investment & Securities, analyzed that 'Group 3 lubricating base oil supply shortages are expected to continue structurally through 2027.'
The government has been monitoring supply and price trends since April 2026 in preparation for potential lubricant scarcity. The industry must focus on maintaining current growth momentum through stable supply chain management and strategic overseas market expansion.