Covid Changed Traditional Trading Patterns of Base Oil and Lubricant

The market of recycled base oil, like bitumen and many other petrochemicals, did not experience any major movement. The main reasons might be the market confusion over the OPEC+ decisions, the rise of delta variants of COVID, and uncertainty about the future of oil products.

Brent fell below $70 per barrel last week and It kept on falling on Thursday as expectations for more supply hit the market. Over the past 250 days, oil prices have been on a rising pattern, and last week’s temporary reductions do not seem to have an impact on commodity prices.

Despite the shortage of recycled oil and raw materials in Iran markets, some manufacturers have reduced prices to some extent. Iranian prices still seem high for the Indian market. It seems the volume of demands has declined due to the corona pandemic and the political situation in Iran.

The balance of supply and demand for lubricant and recycled oil remains tense in the Middle East. The small correspondence between base oils and crude prices has disappeared with the shortage of base oil resources. Countries, such as India, seem to be recovering from coronavirus outbreaks. However, some countries are dealing with rising infection rates. For example, Indonesia -a major consumer of car lubricants- has become Asia’s new COVID-19 hub. This may affect the consumption of base oils, lubricants, and recycled base oil in the coming weeks.

Big tenders for slack wax and virgin base oil were held by Sepahan and Pars in the past few days that will be delivered in about three months. It seems that these tenders can regulate the prices in the market.

A large amount of Iraq Iso-recycle called Iraq recycled base oil is being exported to India, which is not sold in warehouses due to low quality. It seems that the only buyers of this quality of refining oil are companies and refineries that can filter this product. It is not generally recommended to buy this product.

Market conditions and the coronavirus pandemic have changed many traditional trading patterns. The market is under the pressure of a sharp drop in US fuel demand. However, analysts believe that as markets improve, global crude oil consumption may outpace OPEC + supply growth.