The global base oils market in 2024 stayed volatile due to price fluctuations, logistical disruptions, and structural changes in supply and demand. For Legion Oil & Gas LLC, as for supplier and distributor of Group I, Group II, and Group III base oils, 2024 underscored the need for increased agility in logistics, delivering market-competitive pricing, and providing enhanced services such as credit trade insurance to meet evolving client demands.
Let’s take a closer look at some developments of 2024 and their impact on both suppliers and buyers.
Price declines amid weak demand
Base oil prices experienced a consistent downward trend throughout 2024. The oversupply caused traders to adopt a wait-and-see approach, expecting further price drops. For example, Group III spot prices were facing downward trends as global producers target European buyers, leveraging advantageous margins. Many have entered into term contracts at much lower prices compared to last year, with expectations that spot prices will continue to decline into 2025.
Decreased European exports
Europe, historically a major exporter of base oils, saw its export volumes shrink significantly this year. Lower refinery output and reduced demand for European products in Asia and the Middle East altered traditional trade flows.
Logistical disruptions in the Suez Canal
The conflict in the Suez Canal is further straining an already fragile global supply chain, particularly affecting shipments from Asia and the Indian Subcontinent to Europe. The longer route around the Cape of Good Hope result in shipping delays and extended transit times, disruptions to vessel schedules and increased costs for carriers and shippers.
Impact of refineries closures
The closure of Eni’s refinery, a key producer of Group I base oils with 600,000 t/yr, was another major development in 2024. This created a tighter supply environment for Group I products, which remain essential for certain industrial applications despite the increasing shift toward higher-quality Group II and III oils. Korean GS Caltex had extended maintenance in 2024, which would limit the amount of available base oils.
The road ahead: prognose for 2025
Demand is expected to decline further in 2025 as producers shift focus to higher-quality base oils. ExxonMobil plans to produce a high-viscosity Group II alternative to the Group I bright stock at their refinery in Singapore.
Polish refinery Orlen is going to add a Group II unit planning 400,000t/yr.
The events of 2024 underscored the importance of adaptability in the volatile base oils market. For Legion Oil & Gas LLC, this year was an opportunity to strengthen our role as a trusted partner. As we step into 2025, our focus remains on delivering reliable and high quality service, fostering long-term partnerships.
