[Edaily Reporter Shin Ha-yeon ] Domestic oil refining stocks are showing strength in early trading as international oil prices surged by more than 5% amid fading hopes for negotiations between the U.S. and Iran to reopen the Strait of Hormuz.

According to MP Doctor on the 11th, as of 9:23 a.m., S-OilCorporation(010950)is trading at 149,400 won, up 7.02% from the previous trading day. At the same time, GS Holdings(078930)is trading at 101,300 won, up 4.11%, and SK Innovation(096770)is trading at 128,300 won, up 3.05%.

This is believed to be due to weakened expectations for a swift agreement, as the U.S. and Iran have each imposed additional conditions during negotiations over the reopening of the Strait of Hormuz. Compounding this, attacks by Yemen’s Houthi rebels on Saudi Arabian oil refineries and Ukraine’s strikes on Russian energy facilities have reignited concerns over disruptions to the supply of crude oil and petroleum products.

Consequently, on the 10th (local time), West Texas Intermediate (WTI) crude oil for September delivery closed at $82.13 per barrel on the New York Mercantile Exchange, up 5.1% from the previous trading day. Brent crude for October delivery also rose 5.0% to $87.72 per barrel.

Along with this, analysts note that conditions are becoming more favorable for domestic refineries in terms of raw material procurement costs. According to Hana Securities, Saudi Aramco’s Official Selling Price (OSP) for Arab Light crude in September was set at -$2 per barrel. This marks the lowest level in approximately six years, since June 2020. Analysts note that the price competitiveness of Middle Eastern crude oil is increasing further due to a combination of factors, including Asian refiners’ diversification of crude oil sources and OPEC’s weakened ability to control supply.

Yoon Jae-sung, an analyst at Hana Securities, stated, “From now on, Asian and South Korean refiners are in a position to procure and refine crude oil at the lowest prices not only in the U.S. but worldwide.” He added, “These structural changes in the crude oil market will not only boost the fundamental earnings power of South Korean refiners but also lead to improved financial structures, increased dividends, and a subsequent re-rating of their valuations.” He continued, “We believe this is a strong buying opportunity,” and named S-OilCorporation and SK Innovation as his top picks.