Korean refiners post W5tn Q1 profit, but inventory gains blur the picture

South Korea’s four refiners reported a surprise operating profit of around W5tn in the first quarter. The result appears to mark a sharp swing from a W6.3bn deficit to a large surplus, but the main driver was inventory valuation gains caused by volatile global oil prices amid the prolonged Middle East war. When crude prices rise, the value of oil already held in inventory increases, boosting accounting profits. The outlook is less clear for the second half, when refiners may face higher crude import costs. The burden is also growing as the maximum price system has been frozen for three consecutive rounds. Source: mk.co.kr.