Brent crude has dived to less than $50 a barrel from a peak above $115 on June 19 last year as increasing U.S. shale oil output helped create a glut amid sluggish global demand growth.
Saudi Arabia, meanwhile, has blocked calls from poorer members of the Organization of the Petroleum Exporting Countries to reduce production to support prices.
In such an environment, JPMorgan Securities Japan said that the five biggest Japanese refiners - JX Holdings, Idemitsu Kosan, Cosmo Oil, TonenGeneral Sekiyu and Showa Shell Sekiyu - would post total inventory losses of 460.4 billion yen ($4 billion) in the years just ended in December or ending on March 31, 2015.
Mizuho Securities projected the five would see inventory losses totalling 586.4 billion yen for the 2014 fiscal periods.
Four of the five refiners are likely to post net losses, weighed down by the inventories, the analysts also said.
(See tables below for details.)
Though the inventory losses will weigh heavily on the companies' profits, there is some bright side.
"If the companies are posting real profits but do not have tax payments due to inventory evaluation losses, then cash-based profit is on the rise while the cash payout becomes less," said JPMorgan analyst Yuji Nishiyama.
JPMorgan sees no inventory losses for JX, Idemitsu and Cosmo in the next business year to March 31, 2016. However, it does see inventory losses for TonenGeneral and Showa Shell of about 78 billion yen in 2015.
Japan's refining sector is set for another round of consolidation after a person with knowledge of the issue said No. 2 refiner Idemitsu has started integration talks with Showa Shell.
Japan's top five refiners control more than 90 percent of the local oil products market.
(Editing by Tom Hogue)
By Osamu Tsukimori
