Global Base Oil Market: Industrial Analysis and Forecast (2020-2026)

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Global Base Oil Market was valued $24.8 Bn in 2019 and is expected to reach $xx Bn by 2026, at a CAGR of 5.0% during the forecast period.

Global Base Oil Market Introduction

The refined petroleum mineral or synthetic material produced by a refinery to a set of specifications, usually lubricant base stock, is known as base oil. The type of base oil used for refining and/or the production method used to produce the base oil can affect the lubricant's quality. Because base oils typically make up 70-97% of the formulation of lubricants, it is critical to the grade of lubricant. The global base oil market is driven by demand for oils in the automotive industry, particularly from emerging countries, as well as stringent environmental legislation requiring strict performance standards.

Global Base Oil Market Dynamics

The automotive industry's rising demand for Group I and Group II base oils is expected to remain a major driver of market growth. Base oils are an important component of any lubricant, as they aid in the production of various properties such as viscosity, pour point, oxidation, thermal stability, seal compatibility, and additive solubility. The product is refined using a variety of technologies, including traditional refining and other advanced refining techniques. The market for base oil is expected to grow in response to rising demand for industrial lubricants, greases, hydraulic fluids, thermal oils, and metalworking fluids made from raw stock fluids like base oil.

Furthermore, overall lubricant demand appears to be sluggish, which is a reflection of projected low operating rates of base oil globally, as every lubricant is made from base oils. Furthermore, because the majority of lubricant formulators lack group II and III production facilities, group I products are usually found at the top of the manufacturing price curve. As a result, application market participants rely heavily on group II and group III products for non-lubricant product formulations.

The market for base oil has undergone significant technological changes in the last decade, with manufacturers continually investing in R&D activities to increase their portfolio. For example, Gas-To-Liquid technology has been successfully commercialized, resulting in an increase in both existing and planned capacity expansion around the world. Through isomerization and existing catalytic hydrocracking processes, the GTL technology is thought to be promising, with high industry opportunities to formulate premium lubricating oils.

Due to the virus outbreak that hampered the movement of the end-use market spectrum, including the industrial and automotive sectors, crude oil availability and prices have been disrupted since early 2020. This resulted in an uneven supply of feedstock’s and, as a result, slower application industry movement.

Global Base Oil Market Segment Analysis

The demand for engine oil is expected to dominate the market.

The engine oil segment dominates base oil demand due to rising demand for engine oil from industries such as automotive, power, heavy equipment, metalworking, chemicals, and others. Engine oils are widely used to lubricate internal combustion engines and are made up of 75-90% base oils and 10-25% additives. They're typically used for things like wear reduction, corrosion protection, and smooth engine internal operation. They work by forming a thin film between the moving parts in order to improve heat transfer and reduce tension during part contact.

Engine oil consumption is expected to be highest in the automotive industry. Due to their properties that aid in the prevention of oil leaks and the reduction of oil burn-offs, high-mileage engine oils are currently in demand in the automotive industry. Globally, approximately 67.47 million vehicles were produced up to the third quarter of 2019, and approximately 52 million vehicles were produced up to the third quarter of 2020, indicating a decrease of about 23%. As a result, there was a drop in demand for engine oils, which had a negative impact on the base oil market's growth. As a result, the aforementioned factors should have a significant impact on the base oil market.

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Global Base Oil Market Regional Insights

Asia Pacific dominated the market for base oil and accounted for 49.3%of the global revenue in 2019. This is attributable to the adoption of the product in the automotive and industrial manufacturing sectors of emerging economies such as China, India, and southeast Asia. Furthermore, favorable regulations aimed at improving vehicle and industrial machine fuel efficiency are expected to fuel the growth of the base oil market in the coming years.

Because of its natural resources, China is a particularly wealthy country. Within the country and internationally, there is a growing demand for industrial goods and automobiles. China, the world's largest automaker, is concentrating its efforts on increasing the production and sale of electric vehicles. China produced 18.17 million vehicles in Q3 2019 and is expected to produce 16.96 million vehicles in Q3 2020, a 6.66% decline, negatively impacting demand for regional base oil.

In the post-COVID era, countries like India, China, the Philippines, Vietnam, and Indonesia has seen growth in the construction industry. These countries' investments in residential and commercial construction have been steadily increasing. In the coming years, this is expected to increase the demand for base oil in construction applications.

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Global Base Oil Market Report Scope: Inquire before buying

Global Base Oil Market, by Region

• North America

• Europe

• South America

• MEA

• Asia Pacific

Global Base Oil Market Key Players

• Chevron Corporation

• Exxon Mobil Corporation

• S-OIL CORPORATION

• Motiva Enterprises LLC

• SK innovation Co., Ltd.

• Royal Dutch Shell Plc

• Neste Oyj

• AVISTA OIL AG

• Nynas AB

• Repsol SA

• Ergon, Inc.

• Calumet Specialty Products Partners, LP

• H&R Group

• Sinopec Corp

• PetroChina Company Limited

• Aramco

• Abu Dhabi National Oil Company

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