Determination Challenges in the Base Oil and Lubricant Market‌

Oil prices rose to $125 last week as Yemeni Houthis attacked Saudi oil production lines. Prices have fluctuated sharply in recent weeks.

It seems likely that prices remain in an upward trend after Saudi Arabia is willing to supply more oil to world markets.

As the Iran-US negotiations on JCPOA become more complicated, the agreement becomes more uncertain. The value of USD against IRR increased which obscures the terms of the decision for market players.

Instabilities in crude oil prices, shortages of raw materials, and unresolved supply issues have led to tight supply and inflated demand. It has pushed up the prices of base oils and lubricants in the Middle East and Asia.

Continuing the Russia-Ukraine war along with unsteady energy prices might force intense oscillations in base oil during the next few weeks.

Rising shipping costs have also affected transactions in Southeast Asia and India as predicted in the last weekly report.

Most traders self-sanctioned Russia in an attempt to stop the war against Ukraine.

Local refineries in India have also decided to use more raw materials to produce fuel instead of base oil.

In China, Covid has erupted once again. Big cities are under lockdowns due to the spread of the virus. The number of cases is rising hectically and it is becoming a frightening factor for the market participants. China’s demand can be much lower than what was predicted at the first of the year. Importers and final consumers are currently hesitant and skeptical about their plans and try to wait for a more stable situation.

The price of caustic soda is still above FOB $700 and the demand for this product is very high at the moment. The price of semi-refined paraffin wax 3% – 5% has reached about $1250 – $1300. The price of recycled oil is around FOB $725 – $735.

Despite the end of the official Nowruz holiday in Iran on March 26, many refineries and market participants are still unable to meet their obligations and are waiting for the end of the holidays on April 4 to return to trade.

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