Base Oil, Recycled Oil, and Lubricants Outlook Following the Unprecedented Rise of Crude

While vaccination is expanding in many countries and governments are easing corona restrictions, oil is rising to the $80 range.

Goldman Sachs predicts that oil prices will get to $90 by the end of 2021. Here are several reasons for the hike:

• Disruption of oil supply in the world market

• Demand growth due to the increase in mobility

• Regional tourism and religious ceremonies

• Consequences of Ida Hurricane and its impact on the supply cycle

Supply chain disruptions continue from the early days of the pandemic to the present day. Consumption of base oils, recycled oil, and lubricants is still affected by the turbulent economic activity. Markets across Europe, the Middle East, and Africa are mainly showing weak demand for various types of base oil and lubricants. However, the demand for some grades is better than others.

Refineries production has accelerated and seems to be returning to pre-pandemic levels. Apparently, the export of base oil mostly happens by road and the shipment of these products has decreased currently. There are a variety of reasons, including rising shipping costs and a lack of interest in shipping flexitanks due to the lack of space on vessels.

In China, most lubricant manufacturers focused on using domestic base oils instead of relying on imports. Prices are under significant pressure, and producers in Southeast Asia have accepted lower prices because they were eager to sell their cargoes before any plunge.

Exports of Iranian base oils and lubricants to India appear to continue to fill the gaps in the Indian market due to a lack of supply from other sources. Despite the end of Manson and the beginning of ceremonies and celebrations, there is an increase in demand from Indian markets.

Indian importers, meanwhile, have been facing the consequences of a shortage of vessel space which, as mentioned in the last weekly report is because of restrictions and congestions in China.

Demand in the paraffin and wax market has also risen, especially in the Indian and South American markets, while supply remains challenging. It is predicted that the production of these products will boost soon as the cold season comes.

In general, the market of base oil, recycled base oil, and lubricant will find better shapes in 2021 and have a prosperous year.

This article was prepared by Tina Taghavi, The account Manager of Infinity Galaxy. (www.InfinityGalaxy.org)