Europe domestic base oils market shrugs off tariffs threat

LONDON (ICIS)–Concerns in the European base oils market about the imminent US-EU trade dispute are limited to the wider economic impact long term, but participants dismissed an immediate effect given an exclusion for oil and oil products.

In 2024, base oils were US’s third most exported chemicals into Europe and mostly concentrated on Group II material. According to ICIS Supply and Demand Database, about 800,000 tonnes of Group II volumes were imported  into Europe from the US last year.

Existing European domestic supply also comes from the Exxon Mobil-owned base oils plant in Rotterdam established in 2019, which adds about 1 million tonnes of capacity per year.

“For the moment I don’t see any impact [from the tariffs], just a lot of tensions and talks and at the end you have to wait and see,” said one market participant.

Current market sentiment is focused on the broader effects of the tariffs and retaliatory action from the EU on the wider economy. Any economic impact may also feed into the US dollar exchange rate and therefore may send some ripples into the base oils market.

“Anything damaging to the broader economy will hurt base oils demand,” agreed Michael Connolly, principal refining analyst at ICIS.

While the tariffs were not perceived as an “an immediate challenge”, some risk remains, market participants told ICIS.

“We see the risk in the supply chain is bigger than the tariff itself,” said one source.

Some other individual producers may face issues should tariffs be applied on base oils or related commodities, like crude oil, in the future.

Base oils hold the top spot for US chemical exports, with flows largely heading to Mexico, the rest of the world and thirdly the EU, closely followed by Canada – also targeted by tariffs this year.

Meanwhile, EU exports of base oils to the US  were lower in 2024 than in 2020. Looking at the top chemicals imported from the EU into the US, base oils are ranked seventh.

More information on the US tariffs and impact on chemical markets is available on the ICIS topic page. AFPM ‘25: US tariffs, retaliation risk heightens uncertainty for chemicals, economies | ICIS

Base oils are used to produce finished lubes and greases for automobiles and other machinery.

Graphs by Yashas Mudumbai.

Thumbnail shows aerial view of oil refinery or petroleum refinery in the industrial factory of heavy industry zone (image credit: AU USAnakul/Shutterstock)