South Korea-based S-Oil Corp., wholly owned by Saudi Aramco, is estimated to have raked in sizable income in the second quarter ending in June thanks to spike in international oil prices.

According to data provider FnGuide on Wednesday, S-Oil’s operating profit for the second quarter is estimated at 415.6 billion won ($375.2 million), which would be 254.3 percent higher from a year ago period. Sales are estimated to have risen 25.6 percent to 5.9 trillion won over the same period.

Its performance would be a strong turnaround from the first quarter when it reported a 31 percent plunge in operating profit as its capacity sharply fell from the interruption for regular maintenance and repairs.

Refiners are now fully operational at a time of strengthening in commodity prices. The average crude oil price broke above 70 dollars per barrel in the second quarter.

The higher raw price helps refining margin, the difference between the cost of crude oil and the average selling price of refined products. When calculating a refining margin, the cost of crude oil price is based on the oil price set at a time of purchasing while the price of refined products is based on the oil price set at a time of selling. Due to such a lagging effect, refiners like S-Oil often benefit from greater refining margin when crude oil prices go up.

Market experts also forecast rosy outlook for S-Oil for the remainder of this year. They predicted S-Oil to post an operating profit of 1.6 trillion won for full 2018, improving 15.7 percent from a year earlier as its new lines would start to churn out more products from the third quarter. The company has completed building its residue-upgrading complex and olefin downstream complex, which would produce high-valued chemical products such as propylene and gasoline. The company aims to kick off commercial operation of the facilities in full swing in the third quarter, a move that is expected to enable the company to bump up output of low sulfur oil fuel.

On Thursday, S-Oil shares closed up 0.91 percent at 111,000 won apiece.

By Park Jae-young and Cho Jeehyun

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