UAE Base Oil Prices Spike After Prolonged Stability of Straight Two Months
- 09-Nov-2023 1:49 PM
- Journalist: Nina Jiang
Middle East, UAE: The Base Oil market has held immense stability for the past two months due to consistent supply shipments catering to the strong demand, while with the beginning of November 2023, a sharp spike has been witnessed by UAE Base Oil prices which stand by several traders as the record-breaking rise was registered in the market which was a year back.
After witnessing the unchanged market dynamics of Base Oil in UAE, the prices finally surged at the starting week of November following increases in the US and Europe to settle at 1695 USD/tonne Base Oil II H 500 EX Dubai, UAE. In the meantime, Group I Base Oil, used to make lubricants, has become more expensive in Saudi Arabia as exports from Yanbu and Jeddah have increased and reached a new high, followed by a similar increase in international prices last week. As a ripple effect, UAE traders acquired steep cargoes in response to the current market situation. Furthermore, UAE buyers continued looking at Group I options from Asia-Pacific, even after prices in that region had increased. Likewise, FOB prices and freight rates for Base Oil from Thailand and Indonesia are too high for the smaller cargoes that were often shipped from Rayong. Henceforth, the combined effect of all these factors surged the market sentiments of Base Oil in a short timeframe.
Previously, the demand for Base Oil in the UAE was catered to by US-based cargo. However, the prices for Group I Base Oil from the US have increased, leading to a halt in trading between the US Gulf Coast and the Middle East Gulf. Hence, as a reciprocator action, the UAE is bound to acquire expensive cargo from the Asia-Pacific region, even at a higher price, during this timeframe.
As per ChemAnalyst, due to the Israel-Palestine war, concerns may arise in the neighboring countries such as Saudi Arabia, Qatar, and the United Arab Emirates could also be drawn in if the fighting widens. Furthermore, the expected change in international prices would affect the price of Base Oil in Saudi Arabia in November. The allies of Hamas, including Iran and Syria, have defencelessly acted against Palestine, while the US has responded to them by sending marine dispute groups to the East Mediterranean. If this situation worsens, then it may impact the supply chain activities of not only the Base Oil but also the essential commodities, including Crude oil, Natural gas, LPG, the food sector, or an endless number of exchanges.