International oil prices have climbed back above $60 a barrel on the impact of U.S. sanctions against Russia, lifting domestic refining stocks as well. As refining margins hit bottom and rebounded, there is an outlook that earnings will improve.
S-Oil closed at 74,900 won on the KOSPI on the 24th. It rose 2.46% (1,800 won) from the previous day. During the session, the share price climbed to 77,300 won, marking a new 1-year high.
S-Oil's share price has gained 21.2% over the past three months (July 24–Oct. 24). Narrowed to one month (Sept. 24–Oct. 24), it comes to 25.3%. That tops the KOSPI index's gain (13.5%) over the same period.
SK Innovation, which has SK Energy as a subsidiary, is seeing the same pattern. Its share price has risen 31.8% over the past month. Foreign and institutional investors made net purchases of more than 180 billion won and 290 billion won, respectively, in S-Oil and SK Innovation shares, pushing up the prices.
Refining stocks struggled even in the first half of this year. As refining margins and international oil prices fell, S-Oil (a 344 billion won loss) and SK Innovation (a 691 billion won loss) posted large deficits.
However, signs that the industry cycle has hit bottom are reviving investor sentiment. This month, refining margins stand at $13–$14 per barrel, more than double the early-year low.
The recent surge in international oil prices also served as a tailwind. U.S. President Donald Trump on the 22nd (local time) announced sanctions on two major Russian oil companies (Rosneft and Lukoil), stoking the rise in prices. It was to pressure a cease-fire in the Russia-Ukraine war.
Russia exports about 4.5 million barrels of crude per day and is a key pillar of global supply. As a result, some expect that, in the short term, tighter supply from the move could push WTI up to $70 a barrel. For refining stocks, when international oil prices rise, the valuation of crude purchased in advance increases, generating inventory valuation gains.
Securities firms are also offering optimistic forecasts. For SK Innovation, the top end of the target price has risen to 165,000 won, and for S-Oil, to 95,000 won.
Hwang Gyu-won, an analyst at Yuanta Securities Korea, said, "We expect an earnings surprise for SK Innovation in the third quarter," adding, "With measures easing financial burdens, the share price will challenge 150,000 won." Hwang also projected that once the "Shaheen Project," the largest domestic petrochemical development, is completed in 2026, S-Oil will see "a corporate value boost of 2.1 trillion–5.3 trillion won."
The key is whether oil prices can extend their upward trend. There are views betting on a rise in international oil prices based on the sharp increase in gold prices since last year. Typically, gold prices react first to liquidity, and oil prices follow with a lag of 20 months.
Choi Jin-young, an analyst at Daishin Securities Co., said, "Oil prices can recover from this point," adding, "After November 2026, when the U.S. midterm elections are held, the pace of gains will accelerate dramatically."
Still, there are many opinions that international oil prices will fall. As OPEC+, the coalition of the Organization of the Petroleum Exporting Countries and major producers, is pushing to increase production led by Saudi Arabia, the International Energy Agency (IEA) expects crude supply to remain in surplus through 2026.