China’s decision to halt exports of gasoline, diesel and jet fuel from October has lifted South Korean refiner shares and raised expectations for stronger refining margins (the profit earned from processing crude into fuel). S-Oil gained 11.69% to 166,200 won on the 2nd, while SK Innovation rose 10.3%, GS climbed 4.1% and HD Hyundai advanced 1.8%. The four companies have combined refining capacity of about 3.2 million barrels a day and operate an export-oriented model because domestic demand is below output. Analysts expect reduced Chinese supply, alongside existing disruptions from Russia and the Middle East, to support international product prices, inventory valuation gains and margins, particularly for diesel and jet fuel. However, Korean refiners are limited by government export controls that cap monthly shipments of regular gasoline, automotive diesel and indoor kerosene at 100% of the same month’s volume last year. Jet fuel is exempt and Korean exports reached 1.14 million tons in May after China restricted product exports in March. A domestic price ceiling also prevents refiners from fully passing higher international prices to consumers, potentially increasing government compensation payments and fiscal pressure. Higher crude prices are also raising naphtha costs for petrochemical producers, whose profitability is threatened by oversupply and limited pricing power.