South Korean refiners are expected to report a 2.5 trillion-won ($2.06 billion) combined operating loss during the first quarter due to lower demand and refining margins, industry sources said Sunday.

The country's four major refiners -- SK Innovation Co., GS Caltex Corp., Hyundai Oilbank Co. and S-Oil Corp. -- are forecast to suffer the hefty operating loss in the first quarter as demand fell amid the economic fallout from the spreading coronavirus outbreak and oil prices plunging due to a price war between oil-producing countries.

Last month, Saudi Arabia, the world's largest oil exporter, started an oil price war with Russia, slashing its selling prices and pledging to unleash pent-up supply to markets already suffering lower demand amid an economic slowdown.

Saudi Arabia's move was widely seen as a step to punish Russia as it balked at production cuts proposed by the Organization of the Petroleum Exporting Countries (OPEC) amid worsening coronavirus woes.

Even if the oil-producing nations end the price war and agree on production cuts, refiners won't likely make a meaningful rebound due to sharply lower demand amid the spreading COVID-19 virus outbreak, they said.

The four refiners have entered an emergency management system to respond to the unprecedented crisis. (Yonhap)