Geopolitical Impacts on the Base Oil and Lubricant Market

Uncertainty over future political events will have a profound effect on trade and business around the world. Asia’s base oil market’s players appear to be on hold. As the risk of a military conflict between Russia and Ukraine rises, energy prices are skyrocketing in Europe. This invasion has obvious effects on all physical markets. Base oils and lubricants are only a small part of the whole equation.

Crude oil prices have reacted to global events and have grown in recent days. The price range seems to remain in the same range until March.

While the Omicron pandemic has created new waves in many countries, there are fewer restrictions and quarantines than in the last 2021. The better condition of the outbreak is leading to improved demand for fuel and other refined products. While most refineries operate at optimal rates, no significant changes are expected in the recycled oil market for the first quarter of the year.

As we approach the Lunar New Year holidays, buyers in China and other destinations such as Taiwan seem to be less willing to ship on the eve of the holidays. Despite the bitter experience of transportation problems in the last weeks and the impossibility of unloading vessels during the future festive weeks, buyers have been less desire to place any new orders.

Due to the overhaul of the largest producer of liquid caustic soda in Iran, its production has stopped and the price has reached above $ 770 FOB Bandar Abbas. This situation will probably continue until next month.

The high supply in the Indian market along with the ambiguities caused by the high infection of Omicron diminished demand in markets such as automotive and industrial lubricants.

At the same time, crude oil and diesel price is rising and sellers do not seem to be so apprehensive to supply products. Therefore, they have kept prices almost unchanged.

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