S-Oil, South Korea’s third-largest refiner, said Friday it logged a bigger net loss in the fourth quarter on-year as a steep fall in oil prices hurt the value of its crude stockpile.

The net loss came to 248.64 billion won ($226.16 million) in the October-December period, further widening from the 27.5 billion won loss a year ago, S-Oil said in a regulatory filing.

Sales were down 22.1 percent to 6.2 trillion won in the period, with the company recording an operating loss of 213.2 billion won.

The firm’s profit was hurt by a drop in oil prices, battered heavily after the Organization for Petroleum Exporting Countries in late November refused to cut its supply in a price war against rising U.S. shale producers.

Dubai crude was trading at $93.52 on Oct. 1, but it shed about $40 to slip to $53.60 on Dec. 31, undervaluing inventory by local refiners, which heavily rely on imports from the Middle East.

For all of 2014, the refiner swung to a net loss of 264.3 billion won, from a 289.6 billion won profit a year earlier, while sales declined by 8.3 percent to 28.55 trillion won from 31.15 trillion won, the firm said.

S-Oil also suffered an operating loss of 258.9 billion won, shifting from an operating income of 366 billion won in 2013. It is the first time that S-Oil has booked an operating loss in 34 years since the first year of business in 1980.

S-Oil said feeble global demand and low cracking margins hurt its profits, which was aggravated by the loss of value in crude stockpiles that were purchased months ago at higher prices.

“The result was attributable to a fall in oil prices in the second half of the 2014, which cost a huge amount of inventory-related loss, ” Bang Ju-wan, the vice president of S-Oil, said in a conference call. “The refining margin was very weak due to relatively slow growth.”

Paraxylne and benzene spreads were also squeezed due to supply increase amid sluggish global demand, while lube base oil margin improved thanks to a sharp drop in feedstock prices, it said.

Company officials expected a strong turnaround in 2015 on the back of strong demand driven by global economic growth and cheap oil. Dubai crude fell below to $45 per barrels on Tuesday, almost halving from June of last year.

“Demand growth is likely to accelerate on the back of the global economy recovery and oil prices,” Bang said. “We’ve already seen positive results in improvement in refining margins. The cheap oil is expected to clear negative factors and improve earnings in the refining business.”

The company expected the paraxylne’s margin will rebound in the second quarter on eased supply pressure, while demand growth from new plants in the downstream sector will outstrip ramped-up supply from new aromatics plants. (Yonhap)