Supply crunch is feeding refining margins and record earnings streak for South Korean refiners.

Asia’s benchmark Singapore Complex Gross Refining Margin touched a new all-time high of $29.5 per barrel as of the fourth week of June. The Singapore GRM last year averaged at $3.4 per month but skyrocketed to near $30 this month as the world is grappling with the energy crisis despite a fall in oil prices to the $100 level.

Refining margin refers to the difference between the cost of crude oil and the average selling price of refined products. Typically, refiners make profits when the refining margin is at $4-5 or higher. The world’s largest oil producer Saudi Arabia recently revised up the official selling price (OSP) of crude by more than 40 percent to $6.5 per barrel, but the move does not impact refiners’ earnings.

The latest decline in crude oil prices is not enough to mitigate the energy supply and demand imbalance triggered by the Russia-Ukraine war.

The country’s four major refiners SK Innovation, GS Caltex, S-Oil and Hyundai Oilbank reported record profits in the first quarter. According to Seoul-based financial data tracker FnGuide, S-Oil’s second-quarter operating profit is estimated to have jumped more than 60 percent on year, and SK Innovation is forecast to have earned more than 1 trillion won ($777.5 million) in operating profit for two consecutive quarters.

Global investment companies and institutions have already revised up their outlook for oil prices in the second half.

Amid refiners’ record-breaking earnings, some local policymakers have started discussions on imposing levies on the refiners’ excess profits as part of efforts to reduce customer burden and stabilize inflation.

By Park Yun-gu and Lee Ha-yeon

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