Oil refinery stocks slide as Mideast conflict fears subside

South Korean oil refining stocks slid in early trading on Wednesday after an earlier rally fueled by fears that oil prices would rise due the conflict between Iran and Israel.

Korea National Oil Corp. shares traded at 17,990 won ($12.94) as of 9:21 a.m. on Wednesday, down 2,210 won, or 10.94 percent, from the previous trading day. Kukdong Oil & Chemicals Co. also saw its shares fall by 3.93 percent, while those of Daesung Energy Co. were down 3.74 percent.

On the secondary Kosdaq market, Heung Gu Oil Co. shares traded at 15,180 won, down 1,320 won, or 8.09 percent.

These stocks saw significant gains recently as tensions in the Middle East escalated following Iran‘s airstrikes on Israel. But fears of an escalation have subsided as Israel refrained from immediate retaliation and moderated its response against Iran, leading to a slight decline in international oil prices.

West Texas Intermediate (WTI) crude oil for May delivery fell $0.05, or 0.06 percent, to $85.36 per barrel on the New York Mercantile Exchange on Tuesday (local time) for a second consecutive day of falls.

Meanwhile, SK Networks Co. saw its shares rise on news that it plans to sell its subsidiary, SK rent-a-car Co.

SK Networks shares traded at 5,490 won as of 9:33 a.m., up 2.43 percent from the previous day’s close.

SK Networks announced after the market close the day before that it selected Affinity Equity Partners, a private equity fund (PEF) operator, as the preferred bidder for the sale of SK rent-a-car and signed a memorandum of understanding (MOU) to negotiate the deal.

The sale is estimated to be worth around 850 billion won.

“We decided to focus our capabilities on artificial intelligence (AI) as a core growth area and will proceed with the SK rent-a-car sale to stabilize our financial structure and raise funds,” SK Networks said.

“ Interest rates will be a burden in terms of finances, but the company’s operating profit will decrease on a consolidated basis, but its debt-to-equity ratio will fall below 200 percent, which will significantly ease its interest cost burdens once the deal is completed,” Hana Securities Co analyst Yoo Jae-sun said on the same day.
Source: Pulse