Logo of SK Innovation (SK Innovation) SK Innovation Co., South Korea's leading refiner, on Wednesday said it swung to the black in the first quarter on inventory-related gains, led by higher oil prices and improved refining margins amid the war in the Middle East.The company posted a net profit of 896.1 billion won ($601.7 million) in the January-March period, shifting from a loss of 125.6 billion won a year earlier, according to a regulatory filing.Operating income for the quarter stood at 2.16 trillion won, compared with a loss of 30.7 billion won a year ago. Sales rose 15.2 percent to 24.21 trillion won."Operating profit at our oil refining subsidiary, SK Energy Co., rose sharply due to a lagging effect and inventory-related gains," the company said. The company, however, noted the gains are temporary and could change in the future depending on developments in the Hormuz Strait.Lagging effect refers to the time gap between changes in crude oil prices and their impact on refiners' earnings. Profit margins tend to increase when oil prices go up.The average price of Dubai crude for the three months ending in March shot up to $128.5 per barrel, nearly double the corresponding figure for the October-December period last year, according to the company.Its battery business, SK On Co., meanwhile, posted 349.2 billion won of operating losses, but reduced deficits by 91.6 billion won from the previous quarter.This was helped by sales growth in the North America region, as well as sales in Asia and Europe recovering, the company said.SK Innovation said it plans to respond more effectively to geopolitical uncertainties while seeking to improve profitability in the long-term, amid growing demand for energy storage systems (ESS) in the United States and the strengthening of electric vehicle subsidies in Europe. (Yonhap)