Amid concerns that military conflict between the United States and Iran could escalate again, international oil prices jumped, sending domestic refining and petroleum-related stocks broadly higher. S-Oil surged more than 10%, and SK Innovation also rose more than 8%, drawing market attention to refinery stocks.

S-Oil Soars 10.82% on Volume of 750,000 Shares

According to the market, S-Oil climbed 16,100 won (10.82%) from the previous trading day to close at 164,900 won. Opening at 151,400 won, it rose as high as 166,900 won during the session, showing a strong upward trend, with trading volume reaching 754,239 shares.

SK Innovation also rose 11,600 won (8.31%) to 151,200 won, touching as high as 154,700 won intraday. Its trading volume of 2,021,408 shares exceeded that of S-Oil.

GS gained 2,800 won (2.74%) to 105,000 won, Geumdong Oil (Geukdong Youhwa) rose 70 won (2.11%) to 3,395 won, and Heunggu Oil climbed 160 won (1.34%) to 12,140 won. In contrast, Michang Oil fell 300 won (-0.24%) to 123,000 won and Korea Shell Oil dropped 3,000 won (-0.58%) to 517,000 won, showing differentiation among individual stocks.

Background: Renewed Middle East Geopolitical Risk... Focus on the Strait of Hormuz

Behind the strength in refinery stocks lies the resurgent geopolitical risk in the Middle East. Diplomatic negotiations between the United States and Iran have also failed to find a clear breakthrough. As a result, the market's key focus has turned to the Strait of Hormuz.

The Strait of Hormuz is a critical maritime route through which Middle Eastern crude oil and liquefied natural gas (LNG) travel. While September LNG shipments recovered to their highest level since the outbreak of the US-Iran war, the possibility remains that renewed military escalation could disrupt transportation, push up marine insurance premiums, and increase volatility in crude oil and petroleum product prices.

Tight Petroleum Product Supply... Refining Margins a Key Earnings Variable

The supply situation for petroleum products is also tight. China's fuel export restrictions and disruptions in Russian diesel supply have combined to put upward pressure on global refined product prices. The United States and Europe are even discussing the release of strategic reserves and diesel inventories to bring down soaring fuel prices.

In this environment, not only crude oil prices but also refining margin trends become an important variable for domestic refiners' earnings. If product prices rise faster as crude oil climbs and the supply of petroleum products such as gasoline, diesel, and jet fuel tightens, it could translate into improved refining margins. In fact, in the recent domestic market, refinery stocks such as S-Oil and SK Innovation rallied as concerns over a global fuel supply shortage came to the fore.

Watch Out for Volatility... Key Variable Is the US-Iran Trajectory

However, the nature of the US-Iran conflict could change rapidly depending on the course of diplomatic negotiations and the intensity of military actions. International oil prices could also correct sharply in the short term if military tensions ease, so caution is needed regarding refinery stock price volatility.

Ultimately, the key variables that will determine the direction of refinery stocks are expected to be whether the US takes additional military action, Iran's response, navigation conditions in the Strait of Hormuz, and trends in international oil prices and refining margins.

[This article was written based on publicly available market data and materials related to international energy markets, and does not constitute a recommendation to invest in any specific stock. International oil prices and refinery stock prices can fluctuate significantly depending on geopolitical conditions, supply and demand, refining margins, and corporate earnings; investment decisions and responsibilities rest with the investor. AI assisted in the writing of this article.]