Base Oil Market Size, Share, Industry, Forecast and outlook (2024-2031)

Base Oil Market is segmented By Group (Group I, Group II, Group III, Group IV, Group V), By Application (Automotive Oil, Hydraulic Oil, Process Oil, Metalworking Oil, Industrial Oil, Others), and By Region (North America, Europe, South America, Asia Pacific, Middle East, and Africa) – Share, Size, Outlook, and Opportunity Analysis, 2024-2031

Base Oil Market Overview

The Global Base Oil Market is estimated to grow at a CAGR of 2.10% during the forecast period (2024-2031).

Base Oil is a lubrication grade oil initially produced from refining crude oil (mineral base oil) or chemical synthesis (synthetic base oil). Base oil, consisting of hydrocarbons with 18 to 40 carbon atoms, is usually classified as oil with a boiling point ranging between 550 and 1050 F.  This oil can be either paraffinic or naphthenic depending on the molecule's chemical structure. Before lubricant is blended with additives, it constitutes just the base oil; in grease, the base oil is blended with a thickener. Synthetics and mineral oil are two separate types of base oils for industrial lubricants, and they are present in all lubricants. Some important properties exhibited by base oil include thermal stability, viscosity index, viscosity limitation, volatility, pour point, oxidation, hydraulic stability and aniline point (the measure of solvency with other materials and additives).

Almost every lubricant used in plants in recent times started as just a base oil. As per the research, the American Petroleum Institute (API) has categorized base oils into five different categories (API 1509, Appendix E). The first three groups are refined from crude petroleum oil. Full synthetic (polyalphaolefin) oils are designated as Group IV-based oils, whereas Group V is for all other base oils not included in Groups I through IV.

Base Oil Market Summary

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Base Oil Market Growth Trends

The global base oil market is driven by Group I and Group II base oil in the automotive industry. Growing demand for industrial lubricants, hydraulic fluids, greases, and thermal oils made from the raw stock fluid is another factor fueling base oil growth in recent times.

Increasing demand for Group I and Group II base oil in the automotive industry is immensely driving the base oil market.

To provide consistency with fast-moving components and high temperatures, advanced engine technology propels the market for high-grade lubricants. The option of base oil influences the overall efficiency of the finished lubricants tremendously. 70–90 percent base oil and 10–30 percent additives are made of engine oils. Therefore, it is expected that the increasing demand for high-grade engine oils will also fuel the base oil market. For diesel vehicles, passenger cars, light-duty trucks, and stationary engines, high-performance engine oils may help withstand severe and rigorous conditions. Engine oils are majorly composed of base oil. Out of the mentioned types of base oil, Group I is readily available and typically is the cheapest among the rest of the base oils. Group I played a vital role in the automotive formulation and industrial lubricants with a low viscosity index for a long time. Therefore Group I is more likely to build the market of base oil in the automotive industry, particularly throughout Europe, whilst Group III has been used to deliver higher performance and lower viscosity.

Growing demand for industrial lubricants, hydraulic fluids, greases, and thermal oils made from the raw stock fluid is another factor fueling base oil growth in recent times.

The base oil is known to hold some excellent properties such as thermal stability, viscosity index, viscosity limitation, volatility, pour point, oxidation, hydraulic stability and aniline point (the measure of solvency with other materials and additives). These properties are more likely to accelerate base oil demand as industrial lubricants, greases, thermal oils, and hydraulic oils for among different end-users. Due to rising demand from different market sectors, companies started investing major chunks in R&D activities to bring the advanced and latest technology and expand their portfolio. For instance, Gas-To-Liquid technology has been successfully commercialized with a rise in existing and planned capacity expansion worldwide. With high industrial opportunities to formulate premium lubricating oils through isomerization and existing catalytic hydrocracking processes, the GTL technology is promising.

Declining demand of Group I and a sudden shift to another grade of base oil demand high investment leading to severely impacting the growing market of base oil in the forecast period

Group, I have been stealing a major chunk of the growing market, particularly in the automotive industry since 2000. However, in recent times, the Group I base oil is expected to record a significant drop in demand, especially in the European and North American regions. This downfall is majorly attributed to the growing inclination toward cleaner and better-quality base oil. Group, I base oil holds a high impurities content, such as nitrogen, sulfur, olefins, and PCNA (Poly-Cyclic Nuclear Aromatics). Also, some refineries converted Group l into Group ll, but many projects for refineries were too expensive. So began the decline of the base oils of Group I, which seemed a natural progression. However, sectors such as marine and process oils expressed concerns that the requirements for viscosity and solvency made them dependent on Group l products. A switch also involved higher investment costs along with the higher prices levied on Group II and Group III base oils. Thus this declining demand of Group I and a sudden shift to another grade of base oil demand high investment leading to severely impacting the growing market of base oil in the forecast period.

COVID-19 Impact Analysis on Base Oil Market

The global base oil has shown a slight decline due to the COVID-19 pandemic as several manufacturing plants were shut for months. The major impact of lockdown due to the COVID-19 outbreak leads to a sudden shut down of base oil-related end-users, estimated to impact the market in the forecast period. COVID-19 had a major impact in 2020 and 2021, particularly in demand for cars and commercial vehicles.

Due to the COVID-19 pandemic, over 80 percent of car production in North America has come to a halt. There is a similar situation in Europe and the Asia Pacific. Furthermore, halthing logistics and supply chain disruption remained the prime factor responsible to hurdle the growth of base oil dur to covid-19 outbreak. Companies such as General Motors, Ford, Honda, Fiat Chrysler Vehicles, and Tesla have temporarily stopped production units. Even if these companies restart production after the pandemic subsidies, the automotive industry will be adversely affected by economic uncertainty and a decline in consumer buying power. Other end-users such as metalworking fluid, industrial oil, and hydraulic oil have seen a similar decline due to pandemic arrival.

Base Oil Market Segmentation Analysis

The global Base oil market is segmented based on group, application and region.

High demand for the Group I product from an array of industries across the globe owing to their characteristics as well as price is building the market of the segment in recent times.

In terms of group the global base oil market is bifurcated into group I, group II, group III, group IV, group V. Out of the different types mentioned for base oil group I is more likely to build a larger market in recent times and expected to maintain the momentum in the forecast period as compared to the other group types. The reason behind the group I's significant market growth is its high demand for the product from an array of industries across the globe owing to its characteristics and price. As per American Petroleum Institute (API), Group I base oils are listed as those containing less than 90.0% saturates, along with sulfur content of more than 0.03% providing a viscosity index between the 80 and 120 ranges. Usually, Group I product is typically 90.0% base oil and 10.0% additive composition. It typically consists of normal petro-based products. Since these oils are produced through solvent refining, which is a relatively simple process, the oils are available on the market at a very low cost. On the other side, Group II is projected to show the fastest market in the forecast period due to its wide spectrum of applications, such as in marine and gas engines, trunk piston engine oils, and others. Growth in this market is mainly attributable to the high performance and affordability of base oil Group II compared to other base oil segments (Group).

Base Oil Market Geographical Share

Consumer adoption in emerging economies such as China, India, and South East Asia in the automotive and industrial manufacturing sectors is more likely to proliferate Asia-Pacific's growing market in recent times.

Asia-Pacific region is building the highest market value of base oil in the forecast period. This is due to consumer adoption in emerging economies such as China, India, and South East Asia in the automotive and industrial manufacturing sectors. Furthermore, it is expected that favorable regulations aimed at promoting the fuel efficiency of automobiles and industrial machinery would fuel the base oil market's growth over the next few years. Furthermore, the growth of transportation, power generation, mining, and other sectors is responsible for the growth of the base oil market. Furthermore, the construction industry has seen strong growth in India, China, the Philippines, Vietnam, and Indonesia. Residential and commercial construction investments in these countries have been growing at a robust pace. This is further projected to increase the demand for base oil in construction applications in the coming years.

Base Oil Market Companies and Competitive Landscape

The base oil market is highly competitive with the presence of local as well as global companies. Some of the key players contributing to the market's growth include Chevron Corporation, S-OIL CORPORATION, Exxon Mobil Corporation, Royal Dutch Shell Plc, Evonik Industries AG, Neste Oyj, Sinopec Corp, Petroleum Nasional Berhad, GRUPA LOTOS S.A, Hindustan Petroleum Corporation Limited or HPCL and among others.

The major players are adopting several growth strategies such as product launches, acquisitions and collaborations, contributing to the growth of the base oil market globally. Key players prefer expansion as the growth strategy for building their business.

• For instance, in August 2019, ExxonMobil Chemical Company, a subsidiary of Exxon Mobil Corporation, announced Synergy Additives Company S.A. de C.V. (Mexico) the distributor of its Group IV/V base stocks in the regions including Mexico, Central America, and the Caribbean. The development helped the company to improve its geographic presence.

Chevron Corporation

Overview: Chevron Corporation is an American international energy firm based in countries around the world with operations. Chevron also refines, markets, distributes fuels and is involved in chemical and mining operations, power generation, and energy services. The company is headquartered in San Ramon, California, and active in more than 180 countries.

Product Portfolio: The company has a product portfolio of base oil that includes:

• ISODEWAXING: The company’s catalyst has revolutionized base oil quality owing to its purity and oxidation stability; Chevron's premium base oils enable blenders to cut formulating costs while meeting stringent specifications for cleaner-burning engines.

Key Development:

• In August, Chevron Corporation announced the first production of 100% renewable base oil from Novvi’s Deer Park, Houston Facility. This recent development is the latest in a series of Chevron announcements signaling its commitment to the energy transition and climate change focused on areas including lowering carbon intensity cost-efficiently, increasing renewables in support of its business, and investing in the future targeting breakthrough technologies.

Why Purchase the Report?

• Visualize the base oil market segmentation by group, application and highlight key commercial assets and players.
• Identify commercial opportunities in the base oil market by analyzing trends and co-development deals.
• Excel data sheet with thousands of data points of base oil market-level 4/5 segmentation.
• PDF report with the most relevant analysis cogently put together after exhaustive qualitative interviews and in-depth market study.
• Product mapping in excel for the key product of all major market players

The global base oil market report would provide access to an approx: 53 market data table, 47 figures and 212 pages.

Target Audience 2024

• Service Providers/ Buyers
• Industry Investors/Investment Bankers
• Education & Research Institutes
• Research Professionals
• Emerging Companies
• Manufacturers
• Distributors
• Supply chain companies