South Korea’s major refiners’ combined net deficit last year is expected to surpass 1 trillion won ($907 million) for the first time.

The four leading companies ― SK Energy, GS Caltex, S-Oil and Hyundai Oilbank ― posted a combined 971.1 billion won in net losses for the first nine months of the year.

According to industry sources, the sharp drop in crude oil prices widened the refiners’ deficit due largely to inventory valuation losses in the third quarter.

This is because the refiners ― whose business portfolios mostly involve refining crude oil ― have been forced to watch as market prices fall subsequent to the purchase of crude oil at higher prices.

Market watchers expect that oil prices will continue to fall and fuel price competition among Korean retailers will intensify as Korean refiners are offering fuel at cheaper prices to reflect the recent plunge in crude prices.

Among the four industry players, three refineries forecast that Dubai crude will rebound to $65 to $70 on average per barrel in 2015 from $53 on Dec. 30, 2014, according to sources.

The average price of Dubai crude, which accounts for 86 percent of South Korea’s total oil imports, was $104 per barrel at the start of 2014. South Korea relies on imports for virtually all its oil needs.

By Park Han-na (hnpark@heraldcorp.com)