Korean Refiners Surge on Rising Oil Prices Amid Middle East Tensions

Korean refiners are experiencing a significant boost in profits due to rising global oil prices. The surge in Brent crude futures above $100 a barrel has improved refining margins, with S-Oil and GS seeing gains of over 40% this month. According to BNK Investment & Securities, the month-to-date average refining margin rose to $40 a barrel on July 24, far exceeding last month's spot refining margin of $29 a barrel.

The long-term average refining margin is around $10 a barrel, and analysts expect refiners' earnings to remain strong in the third quarter. However, airline stocks such as Korean Air and Jin Air have weakened this month due to rising jet fuel costs. Brokerages predict that global oil prices could climb as high as $160 a barrel if geopolitical risks persist.

Kim Hyun-tae, an analyst at BNK Investment & Securities, stated that refining margins are widening rapidly due to the increasing price of refined products such as diesel and kerosene. If there is no major disruption to feedstock supply, refiners' earnings should remain above expectations in the third quarter.