New Export Rules and Production Restrictions Limiting Recycled Oil Trades

With the start of monsoon in Southeast Asia and India, contrary to expectations, the demand for recycled oil and base oil has continued to increase. The price of this product crossed $700 again. Considering the onset of summer and the development of vaccination, global demand for these products has surged as transportation and fuel consumption increased. Iranian suppliers and refiners are still facing supply shortages. Lack of raw materials and new export rules have prevented supply from growing in line with demand. The same situation is happening for other oil-based products, such as paraffin. High demand and a lack of raw materials have pushed up the price of paraffin to over $900 per MT. One of the issues that have plagued producers of paraffin and recycled oil has been the power outage in recent weeks. Some manufacturers say that the power outage has greatly slowed down the production process. Aside from the severe supply tightness, lubricant and base oil prices received support from soaring crude oil and feedstock values. Oil prices fluctuated widely over the past few days. Following the rise of oil price and last week's agreement by OPEC+ to increase supply, price fluctuations continue to stay in an aura of ambiguity. Especially, since the plan to lift sanctions on Iran has not been fully determined yet. Less than two weeks remain to Iran's presidential election. Meanwhile, USD rate instability and unpredictable market conditions have reduced the propensity to trade. The condition of lubricants and base oils prices still have to be clearer and we should wait for a more stable situation in India and Iran. It seems that in the coming weeks, after the removal of the Indian lockdown restrictions and the Iran presidential election, we get the chance to see more tangible conditions. Moreover, after the election and sanctions lift, the USD rate will be steadier and traders can decide much better.