Concerns About Production Shortage in the Market

In the past two weeks, Russia has captured two major Ukrainian cities. Reports indicate that three major Ukrainian ports will also be closed. These issues caused a direct impact, especially on agriculture. It seems that the market will face many deficiencies in the summer.

One of the most important effects of the Ukraine war is fuel shortages and high demand for this product.

Many refineries have prioritized the use of existing raw materials for fuel production over the production of base oils. This has led to a dramatic and unprecedented rise in base oil prices in recent weeks.

It is unattainable to anticipate the end of the war in Ukraine. Oil prices might remain volatile for a while. This caused major restrictions and uncertainty in the market of oil products.

Oil prices have been hovering between $ 104 and $ 109. Despite the fluctuations, India has reduced its bitumen prices by nearly $10, but fuel prices have risen due to its high demand in the past weeks.

It appears that in the next few days, we will face another change in Iran, which will have an upward trend again according to signs of the market.

The status of the JCPOA is still in a state of ambiguity and no definite conclusion has been reached yet.

China’s market has become a tense trading environment and the ambiguity continues in this market. The government imposed severe quarantines in major cities such as Shanghai and Beijing. Anti-covid policies led to the closure of many businesses and factories due to a lack of staff and product shortages. China has also introduced a new vaccine for corona.

As we mentioned in the last weekly reports, supply chain disruptions led to disorder in port operations and congestion at terminals. Rising fuel prices and limited vessel space have also led to higher freight rates in Asia.

In the recycled base oil market, prices are reported in the $ 780-790 range. Caustic soda flakes also remained about $ 850 FOB Bandar Abbas over the past week. High demand and production deficits continue to affect the lubricant market. Price of paraffin 3-5% reported at around $ 1,400 last week.

In general, limited supply, constant demand and fluctuations in crude oil along with the rising value of raw materials impact current spot prices.

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