Base Oil Market Overview

“The Base Oil Market Predictable at $19.45 billion in 2022, is estimated to increase at a CAGR of 5.20% from $21.10 billion in 2023 to $34.87 billion by 2030.”

Base oils, created by refining crude oil, are used in various industries like automotive, engineering, and manufacturing to produce lubricating oils, engine oils, transmission and industrial gear lubricants, and greases. They are also used in household appliances like dishwashers, washers, dryers, refrigerators, mixers, and blenders. Base oils are available in various types, including PAO oil, synthetic ester oil, virgin base oil, and naphthenic base oil.

Polyalphaolefin (PAO) is a synthetic base oil used in industrial and automotive lubricants. Ester oils are used in automotive, HVAC, and industrial applications. Virgin base oils are group I lubricant manufacturers. Naphthenic base oils are ideal for automotive, industrial, and tire manufacturing due to their thermal stability and compatibility with synthetic elastomers.

The automobile industry is a significant contributor to global base oil production, with stable demand for lubricants. However, electric vehicles have limited after-sales growth for specific lubricants. Consumers demand standard and specialized solutions, leading lubricant makers to invest in innovative products. The rising consumption of lubricant makers is expected to drive base oil demand over the predicted period.

Developing economies like China, India, and Indonesia are driving the global manufacturing industry, contributing around 14% to GDP in 2021. This growth is attributed to the availability of raw materials, lower infrastructure and labor costs, leading to base oil producers increasing production units in developing countries.

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Key Takeaways

In 2022, the Asia Pacific region is expected to dominate the global market, accounting for over half of all sales.

In 2022, the group I segment dominated the market, accounting for over 43% of total revenue in terms of product.

In 2022, the automotive oils category dominated the market, accounting for more than 43% of total sales.

A refinery can create base oil as one of its speciality products. A refined petroleum mineral or synthetic material created to a set of standards by a refinery, often lubricant base stock, is known as base oil. Base oils are created by extracting and treating high-viscosity material from vacuum gasoil or vacuum residual distillation cuttings. This demands unique processing through a range of lubes plant units. The type of base oil used for refining and/or the process utilized to generate the base oil can have an impact on lubricant quality. It is crucial in terms of lubricant grade because base oils make up 70-97% of lubricant formulation.

Base oil, a key component in lubricating oils, is extensively utilized in various sectors, with Group I base oils being primarily utilized in marine lubricants, particularly in the shipping sector, to enhance engine and equipment efficiency, requiring high viscosity base oils for optimal performance.

Market Dynamics

Growth Drivers

Rising need for high-quality oils in the automobile industry

The demand for high-quality lubricants for fast-moving parts and high temperatures is increasing due to advancements in engine technology. The performance of finished lubricants is significantly influenced by the base oil used. Engine oils, consisting of 70% to 90% base oil and 10% to 30% additives, are expected to drive the base oil market. High-performance engine oils are beneficial for stationary engines, light-duty vehicles, passenger cars, and diesel trucks.

Lubricant use is increasing in the automotive industry

Base oils are crucial in the production of various lubricants, particularly in the automotive sector. The global automotive market is expanding rapidly, particularly in developing countries. In 2018, new vehicle sales reached 95.05 million units, indicating a growing demand for base oils in the automotive industry. Manufacturers are working on improving vehicle efficiency, which could further increase the demand for these lubricants in the future.

Trends

• The engine oil segment will dominate market demand.
• The engine oil segment is currently the primary base oil consumption due to its increasing demand from various industries.
• Engine oils, typically consisting of 75-90% base oils and 10-25% additives, are commonly utilized to lubricate internal combustion engines.
• These are commonly utilized to minimize wear, prevent corrosion, and ensure the smooth operation of engine internals.
• India experienced a 27% increase in car sales, despite a modest vehicle market. New passenger car registrations in Japan and Europe decreased in 2021, but light vehicle demand slightly increased in Russia, the US, and Brazil.
• As a result, the aforementioned factors are expected to have a significant impact on the engine oil market in the coming years.

Competitive Landscape of the Base Oil Market

• Repsol
• Neste
• GS Caltex Corporation
• Bharat Petroleum Corporation Limited
• H&R OWS Chemie GmbH & Co. KG
• SK Lubricants Co., Ltd.
• LUKOIL
• Bahrain Lube Base Oil Company
• Sepahan Oil
• Saudi Arabian Oil Co.
• BP p.l.c
• Indian Oil Corporation Ltd.
• Shell plc.
• Chevron Corporation
• Abu Dhabi National Oil Company
• ExxonMobil Corporation

Recent Developments in the Base Oil Market

January 2020 - NYFLEX 201B and NYFLEX 2005 are highly refined process oils introduced by Nynas AB for use in sealant formulations.

August 2019 - ExxonMobil Chemical Company, a subsidiary of Exxon Mobil Corporation, has selected Synergy Additives Company S.A. de C.V. (Mexico) to distribute its Group IV/V base stocks (synthetic base stocks) in Mexico, Central America, and the Caribbean. The development aided the company's geographic presence.

September 2022: Indian Oil Corporation Limited (IOCL) granted an engineering, procurement, and construction contract to ThyssenKrupp Industrial Solutions India Private Ltd. for USD 75 million with a capacity of 270 kilotons per annum (KTPA) Catalytic Dewaxing Unit (CDWU) used for the production of lube base oils at its refinery located in Gujarat, India.

April 2022: Chevron Global Energy Inc., a subsidiary of Chevron Corporation, acquired the NEXBASE brand of Neste Corporation. This acquisition will strengthen the company’s position as a leading supplier of base oils worldwide.

Regional Insights

The Asia Pacific region, one of the world's largest base oil markets, is currently controlled by China due to its expanding economies and rising disposable income. China's dominance is attributed to increased automobile usage and the rapid growth of its industrial industry. The region's growth is facilitated by foreign investment, rapid development, and a growing population, making it an attractive market for lubricant manufacturers.

The Indian market is expected to rapidly grow due to the presence of base oil producers and the Indian government's rapid infrastructure development. Europe is predicted to hold the world's second-largest revenue share in 2022, driven by lubricant consumption, which is primarily constituted of base oil. The growth of transportation and industrial sectors is closely linked to base oil consumption. Between 2005 and 2015, passenger and commercial vehicle usage increased by 3.8% and 3.7% respectively.

Segments Covered in the Base Oil Market

Base Oil Market By Product

• Group V
• Group IV
• Group III
• Group II
• Group I

Base Oil Market By Application

• Industrial Oils
• Metalworking Oils
• Hydraulic Oils
• Process Oils
• Automotive Oils
• Others

Base Oil Market By Region

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East and Africa

Frequently Asked Questions

What is the base oil market size?

Base Oil Market Predictable at $19.45 billion in 2022, is estimated to increase at a CAGR of 5.20% from $21.10 billion in 2023 to $34.87 billion by 2030

What will be the CAGR of global base oil market?

The global base oil market will register growth rate of 5.20% between 2023 and 2030.

Who are the prominent players operating in the base oil market?

The major players operating in the base oil market are Repsol, Neste, GS Caltex Corporation, Bharat Petroleum Corporation Limited, H&R OWS Chemie GmbH & Co. KG, SK Lubricants Co., Ltd., LUKOIL, Bahrain Lube Base Oil Company, Sepahan Oil, Saudi Arabian Oil Co., BP p.l.c, Indian Oil Corporation Ltd., Shell plc., Chevron Corporation, Abu Dhabi National Oil Company, ExxonMobil Corporation, PetroChina Co., Ltd., PT Pertamina (Persero), Petroleum & Chemical Corp. (SINOPEC), PetroCanada Lubricants Inc., CNOOC Limited. and Others.

Which are the driving factors of the base oil market?

The driving factors of the base oil market are the rising demand from automotive industry for high-quality oils, lubricant adoption is growing in the automotive industry, and rapid industrialization in emerging markets.