S-Oil Poised for Record-Breaking Earnings Amid Global Refining Shortage
S-Oil, South Korea's leading oil refiner, is expected to report an 'earnings surprise' that exceeds market expectations in the third quarter due to a prolonged shortage of refining facilities and high diesel prices in the U.S. The company has a high proportion of crude oil introduced from the Middle East, where the official selling price (OSP) remains negative for three consecutive months.
According to NH Investment & Securities and Korea Investment & Securities, S-Oil's operating profit is expected to rise 34.1% in the third quarter to 1.2945 trillion won, surpassing market forecasts by over 22%. The oil refining sector's operating profit alone is expected to reach 851.8 billion won, a 60% increase from the previous quarter.
The global shortage of oil refining supplies is driving strong performance in the industry, despite the U.S. refinery utilization rate being at an all-time high of 98%. Saudi Arabia's policy to cut OSP toward Asia is also strengthening S-Oil's profitability, with negative OSP for three consecutive months.