Re-Positioning Main Players of the Market amid Pandemic and Supply Tightness

on April 23 While future crude oil trades slumped for the third day, yesterday Oil prices surged in hopes of demand recovery for fuel in the United States and Europe. Despite rising COVID-19 cases in India, the world’s third-biggest oil importer, and raising concerns in Japan, signs are still showing a fuel demand recovery. The vaccine rollout accelerates in the US, UK, and Europe.

However the vaccination going on in many countries, the COVID-19 pandemic still has a continuous effect on business. Demand still coming from the Indian market although the unavailability of all base oil groups led to dissatisfaction of the traders. The main reason for this exceptionally tight market is the shortage of feed stocks available to refiners due to cutbacks in transportation fuels.

Apart from the influences of the pandemic and the supply tightness, suppliers and importers had been struggling with many logistical problems in recent weeks. Shortage of containers and vessels especially for flexi tank shipments is the main issue for the import-export operation these days.

As expected in the last weekly reports of Infinity Galaxy, the progress of the Iran-US negotiations has prompted the USD to collapse and soaring base oils, paraffin, and other oil commodities’ prices. In recent weeks, the FOB price of paraffin wax in Bandar Abbas has increased by USD 100-150, the main reason is the lack of slack wax and the growth in the world price of this product.

The Recycled base oil market has been experiencing steady conditions for the past two months and FOB Bandar Abbas prices are still oscillating around USD 700 to USD 720. Indian prices were not as high as other markets, so the country is not attracting a significant volume of cargoes.

Infections, lockdowns, and changes in key market situations such as India, will affect fuel and lubricant consumption in the coming weeks and disrupt the region’s base oil activities.

This article was prepared by Tina Taghavi, the account manager of Infinity Galaxy . (www.infinitygalaxy.org).