S-Oil’s base oil unit made a profit for the company in the first quarter of 2025, while refining and petrochemical streams reported substantial losses, according to Korean media. The company blames weak demand and low oil prices creating ever-narrower refining margins.
Crude oil prices have oscillated due to the effect United States tariffs are having on the global economy. In early April, they fell to their lowest since 2021 with analysts blaming tariffs.
Yet for S-Oil, South Korea’s third-largest refiner, which is majority owned by Saudi Aramco, base oil production has provided steady income. It has capacity to produce 2.12 million metric tons per year of API groups I, II and III from its Onsan plant.
Base oil production turned in operational profit (earnings before interest and taxes) of 109.7 billion won (U.S.$77 million), while refining and petrochemicals saw losses of 56.8 billion won and 74.5 billion won, respectively, adding up to a loss of 21.5 billion won.
The previous reporting period – the fourth quarter of 2024 – saw S-Oil in the black to the tune of 160 million won. However, year-on-year sales were down by 3.4% to 9.31 trillion won, and operating profit (454.1 billion won) fell by about 470 billion won. The company also reported net losses of 44.6 billion won.
S-Oil said it expects demand to improve after the middle of the year if crude prices stay low.