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By Anna J. Park
As global oil prices have surged to their highest level since 2014, with prices rising over eight percent on Tuesday, Korean oil stocks have showed strong bullish moves.
Korea Petroleum Industries' stock price soared by 15.35 percent on Tuesday, finishing at 23,300 won ($19.3) won at closing. The stock also hit its daily increase limit on February 24 amid the heightened military tension between Russia and Ukraine.
S-Oil, the country's major petroleum and refinery business, also saw its stock price jump more than 6.04 percent on Tuesday. The stock of Joong Ang Enervis, which takes charge of the oil distribution business, both wholesale and retail, also increased by 6.77 percent at Tuesday's trading closing. Kukdong Oil & Chemicals Co. also showed strong gains of 3.6 percent.
The drastic increase of global oil prices is behind local energy stocks' soaring moves. Brent-crude futures, the world's benchmark for oil prices, rose by 8.6 percent on Tuesday, reaching $106.38 a barrel. West Texas Intermediate also soared to $104.77 a barrel. These hikes represent the biggest one-day increases in oil prices in the past two years, since May 2020. They also amount to the highest oil price level since July 2014.
Although the 31 member countries of the International Energy Agency (IEA) decided to release 60 million barrels of oil from emergency reserves in a move to respond to the war, the first such measure since 2011, the move doesn't seem enough however, to assure global markets.
Now faced with another layer of supply restraint and instability from the Russia-led war in Ukraine, as well as multiple international sanctions imposed on Russia, oil prices are expected to surge more, sending economic shocks to other countries due to the increased inflationary pressure.
What is more worrisome is that even without the impact of the Russian invasion, global strategists had already been forecasting that global oil prices would continue to surge in 2022, owing to increased global demand during the ongoing pandemic. Bank of America predicted late last year that Brent crude oil could go up to $120 per barrel by June 2022, mainly due to increased demand globally amid the projected economic recovery from the pandemic.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC), as well as Russia-led ally countries, are slated to meet on Wednesday to discuss the current situation.
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