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Rising Inflation Stabilized the Base Oil Market in Europe

Rising Inflation Stabilized the Base Oil Market in Europe

Rising Inflation Stabilized the Base Oil Market in Europe

  • 20-Jul-2022 2:34 PM
  • Journalist: Rene Swann

Frankfurt:  Since the latter half of June 2022, the Base Oil market throughout the European region has steadied, and some markets are observing a weakening trend. The market dynamics are keening towards a staggered approach against the persistent gyration in market sentiments in the past few months. Currently, the European market is observing an oversupply supply scenario amidst more availability and lesser offtakes for the spot inquiries.

The trend is mainly witnessed in Europe, where the demand for Base Oil has dropped in the major economies of the Eurozone region, i.e., Germany, France, Italy, and Spain. At the same time, the demand for finished lubricants remained buoyed in the U.K despite the industries in Europe moving towards the traditional holiday season and the end-use lubricants market also approaching the seasonal end. Therefore, the producers are targeting export markets for the end-use lubricants.

Whereas the upcoming hurricane season in the United States made the producers aware of the inventory standpoint, most of the Base Oil volumes produced in the U.S. have been diverted to alternative destinations, especially amongst the European market participants.   

The western nations' retaliatory sanctions on Russia significantly impacted the arbitrage pattern, and the gyration in the upstream energy cycle caused severe inflation in the global markets. It was further followed by the embargo of the Russian Ural Crude by the European Union, except for some landlocked countries, further soared the inflation and rates in the European region.

According to ChemAnalyst, the Base Oil market in the European market is anticipated to observe a downward trend for a couple of months until the demand picks up by the end of the third quarter of 2022. Whereas, in recent times, the value of Crude Oil has a fall unprecedently, showcasing a clear indication of a recession in the Western region.

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