India Cyclone and Pandemic Curbed the Base Oil and Lubricant Deals

As Infinity Galaxy mentioned in Monday’s article, the decision of the OPEC+ meeting finally changed all variations. Oil prices hit two-year highs up to $70 after OPEC and its associates predicted higher demand and boosted output. In addition to the meeting effects, oil demand showing clear signs of improvement as vaccination plans are accelerated, and the economics are recovering in most parts of the world. However, with the uncertainty of the status of sanctions, Iran is still going to be a big question mark for them.

India’s base oil demand is likely to recover from July due to the fall in the number of Covid-19 cases and a continuing vaccination help to ease lockdowns and support consumption.

India was about to take a step forward with an easing in Covid-19 restrictions but the country’s cases increased again since last week when cyclone Yaas slammed into the country’s eastern coast. Reports indicate that Indian Lockdowns are extended in June.

While there are hints that the tight supply condition for base oil and lubricant has started to ease, the remaining shortage of containers and vessel space affected transactions and trading procedure.

Prices of base oil and lubricant were generally more stable than last months but the recent increase in oil price might change the market scenario again. This ambiguity exists while the situation of the USD is not stable yet and fluctuations continue to keep the market irregular.

Shipment of recycled base oil cargoes from Iran declined in recent weeks due to shortage of supply and decreasing price sentiment by Indian buyers.

The news indicates that yesterday, on Wednesday evening, a large fire occurred due to a leak in one of the Tehran refinery’s oil tanks. It could affect the price of Iran’s petroleum products in the coming weeks.

In May, some of China’s refineries increased paraffin wax prices, and buyers started to trade cautiously. The paraffin wax demand entered its slow season and buyers mainly purchase on a need-to basis. Currently, there are no extensive deals in the market. There is still demand in the Iran market for this product, however, there are also supply constraints.