S-Oil Soars 10% as Oil Prices Rise on US-Iran Tensions
Oil prices have risen for four consecutive days due to renewed tensions between the US and Iran in the Middle East. This has led to a surge in South Korean refining stocks, with S-Oil rising 10% to 162,800 won (approximately $120), GS up 6.39% to 126,500 won ($93), and SK Innovation gaining 4.89% to 137,200 won ($100). KOSDAQ-listed Heunggu Oil also posted gains of over 2%. The rally reflects growing concerns that Middle East-driven geopolitical risks are unlikely to be resolved in the near term.
On the New York Mercantile Exchange, October-delivery West Texas Intermediate (WTI) crude futures settled at $91.30 per barrel on September 3, up 0.32% from the previous session. Analyst Lee Dong-wook of IBK Securities notes that refining margins are soaring due to low water levels on the Rhine River in Europe constraining product transportation and competition for securing low-priced Russian crude.
Lee advises investors to focus on the duration of margin strength rather than additional upside, as gasoline and diesel cracks are already at historically high levels. He expects S-Oil, with its high earnings contribution from refining and base oils, to benefit the most from the current trend.