International oil prices have hit a record high in seven months as they went up over US$50 a barrel. The domestic oil refining sector raised its hopes of improving their profitability in the third quarter after suffering poor results for two consecutive quarters.
The spot price for Dubai crude as compiled by the Korea National Oil Corp. was $53.64 a barrel on September 16, up by 7 cents from the previous day. This is the highest level since February this year when the figure was $54.39.
The recent hike in oil prices was led mainly by expectations that demand would increase. The Organization for Petroleum Exporting Countries and the International Energy Agency adjusted their demand outlook upward to 96.77 million barrels and 97.73 million barrels, respectively, a day on average, up by 50,000 barrels and 100,000 barrels.
As oil prices show signs of gradual upward movements, the nation’s top-four oil refiners including SK Innovation, GS Caltex, S-Oil, and Hyundai Oilbank will likely see their results improve markedly. That’s because the estimated value of their inventory that has already been purchased would appreciate if oil prices go up. For every 1 dollar increase in oil prices the oil companies will have by several million dollars of estimated gain.
For example, SK Innovation, the No. 1 company in the industry in terms of sales, expects that its operating profit in the third quarter would reach 800 billion won, almost twice as high as the second-quarter operating profit.
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