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Updated to Q1 2020
Group I base oils supply is expected to remain mostly stable in Q1. Persistent tensions between the US and Iran are expected to be key factors, although Iran has been trying to sidestep sanctions. This is expected to continue in Q1, but the geopolitical situation could lead to further disruptions.
Demand from the UAE is expected to remain stable to soft in Q1 2020 as buyers fret about deteriorating relations between the US, its Gulf allies and Iran. Demand for Iranian Group I could also persist from countries such as India. But reduced demand could be expected from other countries in northeast Asia that are facing pressure from the US to reduce trade with Iran.
Middle East Group II 150N and 500N spot supply in Q1 2020 is expected to be stable. Some major refiners appear to have more spot supply available but pricing pressure is likely to persist amid stiff competition. The supply of deep-sea cargoes not expected to be abundanr, but Asian Group II suppliers will also be facing tough price competition from Middle Eastern producers. Regional geopolitical tensions could also affect supply.
Demand is expected to remain largely stable in Q1 2020 as the Middle East is not a major consumer of Group II base oils relative to Asia. US sanctions on Iranian crude exports, the US-Iran dispute and US-China trade tensions remain major concerns for the base oils market and demand is expected to show only mild improvement. Further clarity is necessary to spur demand.
Middle East Group III base oils supply is expected to be stable. There were talks circulating in the market of expansion plans. However, Middle Eastern refiners were largely tied to contractual obligations and focused largely on certain export markets. As such, available spot volumes are likely to be tight. Actual volumes offered to local buyers are expected to be limited due to the relatively smaller market there.
Middle East Group III base oils demand is expected to be stable, with the key producers in the region remain focused on export markets in Asia and the US. Group III consumption in the Middle East is typically limited and largely opportunistic. No fundamental changes are expected in Middle East for Group III base oils in the quarter, but some local market players are still eyeing arbitrage deals, buying at local prices and re-exporting.
We offer the following regional Base oils-Lubes analysis and news coverage to keep you informed of factors and developments affecting prices in the Base oils-Lubes marketplace.
News & analysis
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The main use for base oils is in the manufacture of lubricants, of which there are many thousands of types.
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ICIS price assessments are based on information gathered from a wide cross section of the market, comprising consumers, producers, traders and distributors. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments, giving you a robust reference for your negotiations.
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