[Special Report] Oil and Gas Stocks Surge Amid Concerns Over Ukraine Invasion

Published 14 Feb.2022 09:49(KST)

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] As geopolitical concerns between Russia and Ukraine cause crude oil prices to surge, energy-related stocks such as oil and gas are showing an upward trend in early trading.

At 9:45 a.m. on the 14th, GS, which primarily supplies city gas, traded at 4,660 KRW, up 29.99% (limit up) from the previous trading day. Daesung Energy also traded at 10,750 KRW, up 25.44% from the previous day. Daesung Energy supplies city gas for cooking, heating, cooling and heating air conditioning, commercial, and industrial use by receiving natural gas from Korea Gas Corporation. In addition, Korea Petroleum (17.65%), Heungkuk Petroleum (14.06%), Daesung Industrial (11.63%), and Geukdong Petrochemical (7.60%) also recorded sharp rises.

The ongoing tension between Russia and Ukraine is reflected in stock prices with the expectation that energy prices such as oil and natural gas could rise further. Russia's share in the energy market is about 17% for natural gas and 13% for oil. KB Securities researcher Ilhyuk Kim explained, “Concerns that Russia may invade Ukraine are a factor driving the rise in energy prices. If Russia launches an attack, the U.S. is likely to sanction Russia, and Russia may limit natural gas supply, threatening Europe.”

International oil prices have already surpassed $90 again amid growing concerns that Russia may invade Ukraine. Russia is an oil-producing country that, along with Saudi Arabia, leads supply increases within OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) and a coalition of major non-OPEC oil-producing countries including Russia).

Kiwoom Securities researcher Subin Shim explained, “During Russia's annexation of the Crimean Peninsula in 2014, there was no significant change in Russia's oil production, so it is uncertain whether Russia's crude oil supply will be seriously affected. However, current low crude oil inventories are increasing market concerns about crude oil prices.”