In terms of revenue, the global base oil market was valued at $29.66 billion in 2021 and is predicted to reach $39.08 billion by 2030, progressing with a CAGR of 3.12% during the forecast period. Also, in terms of volume, the global base oil market is estimated to increase from 32563.42 kilotons in 2021 to 44923.94 kilotons by 2030, rising at a CAGR of 3.65% during the forecast period of 2022 to 2030. The market study has also analyzed the impact of COVID-19 on the base oil market qualitatively as well as quantitatively.

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Base oil is a refined product of crude oil, which is used to manufacture motor oil, lubricating greases, metal processing fluids, and others. Different products require different properties and compositions in the oil. As a result, chemical substances such as additives are added to base oils to meet the quality needs for end products, such as cleaning properties and friction, among others.

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Key growth enablers of the global base oil market:

• Increasing demand for high-grade oils in the automotive industry
• Diverse range of applications across different end-users
• Stringent environmental legislation leading to strict performance standards
  • Governments of different countries across the globe are promoting the fuel efficiency of automobiles amid increasing concerns pertaining to environmental degradation and the ill effects of greenhouse emissions on human health and the environment.
  • For instance, in 2020, the American Petroleum Institute approved new performance standards for engine oils used in passenger cars with improved fuel efficiency as well as protection for automotive gasoline engines. Also, in Europe, the European Automobile Manufacturers Association (Association des Constructeurs Européens d’Automobiles, ACEA) sets the engine oil standards.
  • Such stringent regulations and policies associated with fuel efficiency and automobile performance are anticipated to increase the demand as well as the adoption of high-performance automotive lubricants such as base oils. Hence, this factor is projected to promote the growth of the global base oil market during the forecast period.

Key growth restraining factors:

• Volatility in crude oil prices
  • The prices of crude oil, as well as petroleum products, can be impacted by events with the capability to disrupt oil flow and products to the market, such as weather and geopolitical-related developments. In addition to causing disruptions, these incidents may also create uncertainty regarding future supply and demand, resulting in higher price volatility.
  • According to International Energy Agency, the price of crude oil recorded in 2000 was $35.51 per barrel, which increased to $54.71 per barrel in 2005 and $78.23 per barrel in 2010. However, the prices reduced to $44.41 per barrel in 2015 and $40.34 per barrel in 2020. In 2021, the price of crude oil was recorded as $49.97 per barrel and $76.43 during the first quarter of 2022.
• Declining demand for group I base oil

Global Base Oil Market | Top Trends

• Rapid industrialization across the globe
  • Industrialization has been a prime advantage for growing economies across the globe as it significantly contributes to market development.
  • The growth in industrial production across developing countries is likely to increase the demand for base oil in different sectors such as construction, mining, agriculture, and automotive during the forecast period.
• Increasing demand for hydraulic oil
  • Hydraulic fluid is composed of a base oil as well as additives. The base oil could be different types of vegetable oil, mineral oil, or synthetic oil.
  • Market players across the globe are developing and launching novel as well as advanced products in hydraulic oil.
• Emergence of renewable base oils
  • Renewable base oils are manufactured from sustainable and renewable feedstocks with advanced biotechnology as well as a pioneering chemical conversion process.
  • There has been an increase in the focus of consumers and end-users towards the adoption of renewable base oil across multiple applications owing to rising concerns regarding environmental degradation. Moreover, a shift towards a sustainable and low-carbon future contributes to this, as well.
• Expansion of base oil plants
  • Significant investments, as well as expansion of base oil plants and refineries across the globe, is a major factor set to promote the growth of the global base oil market during the forecast period.
  • For instance, the construction of API Group III (base oil) plant at Panipat refinery by Indian Oil Corporation Ltd in 2021, refinery expansion in northern Brazil by investing $2.5 billion by Petrobras in 2021, and others.

Market Segmentation – Group and Application –

Market by Group:

• Group I
  • In terms of revenue, the group I segment is set to dominate the group category over the forecast period.
  • This group of base oil is characterized by its low aromatic compound content as well as paraffinic nature. Moreover, it is less refined with a mixture of different types of hydrocarbon chains and little uniformity as compared to all other groups.
  • Group I base oils majorly find applications in marine, automotive, and rail lubricants owing to their simple processing, affordability, high viscosity index, low volatility, and lubrication properties.
• Group II
• Group III
• Group IV
• Group V

Market by Application:

• Automotive Oil
  • The automotive oil segment accounted for the highest market share within the application category in 2021 in terms of revenue.
  • Automotive oils are used in the manufacture of lubricants adopted in the automobile sector. Automotive lubricants are capable of reducing friction and heat generation in the engine and steering components of automobiles. Such lubricants can also cool automotive components under specific circumstances.
• Industrial Oil
• Greases
• Hydraulic Oil
• Metalworking Fluids
• Other Applications

Geographical Study Based on Four Major Regions:

• North America: The United States and Canada
• Europe: France, the United Kingdom, Germany, Italy, Nordic Countries, Spain, and Rest of Europe
• Asia-Pacific: China, India, South Korea, Indonesia, Japan, Thailand, Malaysia, Australia & New Zealand, and Rest of Asia-Pacific
  • In terms of revenue and volume, Asia-Pacific is anticipated to be the most dynamic regional market with a share of 41.01% and 41.26%, respectively, in 2021. It also accounts for the most lucrative region for major end-users in the market.
  • Growth in the production as well as sales of automobiles in countries such as China, Japan, and India to increase the adoption and deployment of motor oil, engine oil, greases, and other automotive lubricants derived from base oils is expected to fuel the market growth in the Asia-Pacific over the forecast years.
  • According to the Organisation Internationale des Constructeurs d’Automobiles (OICA), the total production of cars and commercial vehicles in China was more than 25.22 million units in 2020 which increased to more than 26.08 million units in 2021. Also, the total production of cars and commercial vehicles in Japan was more than 7.84 million units in 2021 (6.61 million cars and 1.22 million commercial vehicles). This factor is set to supplement the market growth in the region during the forecast years.
• Rest of World: Latin America, the Middle East and Africa

Major players in the global base oil market:

• Exxon Mobil Corporation
• Chevron Corporation
• Saudi Aramco
• Shell PLC
• Neste Oyj

Key strategies adopted by some of these companies:

In 2022, ADNOC Distribution announced the launch of the new Voyager Green Series, which is a range of lubricant products for petrol as well as diesel engines made from 100% plant-based base oil.

In 2021, Chevron Corporation announced an agreement to acquire the group III base oil business of Neste Oyj, which included its related sales and marketing business as well as the base oil brand NEXBASE.

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