Base Oil Market

Base Oil Market Growth Outlook 2022-2032

The global base oil market is valued at US$ 35.26 Million in FY 2022, up from USD 34.47 Billion in 2021.

During the past year, the industry registered a Y-o-Y increase of 2%. From 2022 to 2032, base oil sales are expected to flourish at a CAGR of 2.3% to reach a value of US$ 44 Billion by the end of 2032.

The global market for base oil is poised to yield absolute dollar growth worth US$ 44 Billion by 2032. Demand for Grade V Base Oil will continue to grow steadily, with a CAGR of 2.5% during the 2015-2021 historical period of assessment, while demand for Base Oil in Automotive proliferated at a rate of 2.4% during the same period.

APAC will dominate the global market, registering a growth opportunity worth US$ 16 Billion from 2022 to 2032.

Fact.MR estimates that the global Base Oil industry is projected to grow at a CAGR of 2.3% from 2022 to 2032, automotive fluid base oil sales are poised to witness a 2.4% CAGR.

Report Attributes	Details
Market Size in 2021	US$ 34.47 Billion
Expected Market Value (2022)	US$ 35.26 Billion
Projected Forecast Value (2032)	US$ 44 Billion
Global Growth Rate (2022-2032)	2.3% CAGR
Growth Rate of the U.S Market (2022-2032)	2.5% CAGR
Expected Market Value of China (2032)	US$ 16 Billion (Approx.)
U.K Market Expansion Rate (2022-2032)	2.1% CAGR
Key Companies Profiled	Chevron Corporation Exxon Mobil Corporation Royal Dutch Shell Plc. Ergon Inc. Neste Oyj Nynas AB S-OIL CORPORATION, Sepahan Oil Repsol S. A. Sinopec Limited, BP PLC Evonik Industries AG H&R Group, Saudi Aramco SK Lubricants Co. Ltd.

2017 to 2021 Base Oil Market Revenue Analysis vs. Market Outlook 2022-2032

Fact.MR has predicted the Base Oil market to grow at a 2.3% CAGR between 2022 and 2032 in comparison to the 2% CAGR throughout the historic period. The upward trend of electric vehicles and the recent advancements in high-performing engine technology has paved a path for augmented sales of automotive vehicles. Thus, in turn, the demand for base oil is also likely to increase in the forthcoming future.

Base oils are widely used in the automotive sector. While 2020 continued to be the recessionary year for the automotive industry in many markets, Fact.MR analysts forecast an upswing in the next couple of years.

Key Drivers Stimulating Base Oil Industry Expansion

High-temperature Bearing Capacity of Base Oil to Act as Prominent Driver

Innovative engine technology is pushing the demand for high-grade lubricants to offer compatibility with fast-moving parts and extreme temperatures. The selection of base oil has an enormous impact on the total performance of the finished lubricants. Engine oils are composed of 70–90 percent base oil and 10–30 percent additives.

Therefore, the growing demand for high-grade engine oils is likely to stimulate the market for base oil as well. Base oils are used to manufacture industrial oils including lubricating greases, and metal processing High-performance engine oils can assist withstand extreme and rigorous conditions for diesel trucks, passenger cars, light-duty trucks, and stationary engines. fluids, and motor oil.

By adding certain chemical substances such as additives, base oils can be prepared to meet the broad range of requirements of industrial oils such as specific degrees of frictional properties, cleaning properties, and others.

Soaring investments and high-scale transformation in the automotive industry are likely to augment demand for the base oil market across the globe. The rising popularity of electric vehicles in the countries like U.S. & China is likely to expand the base oil market size in the upcoming years. According to Fact.MR, the surge in demand for various types of industrial oils will continue to create sustained opportunities for market players in the long run.

Key Challenges to Base Oil Industry Expansion

Crude Oil Price Fluctuation to Have a Disastrous Impact on Base Oil Industry

The base oil market is significantly influenced by the variation in the crude oil market. With the prevalence of COVID-19, the global economy crashed and caused a downfall in the oil & gas business as well. Although the crude oil market earned a tremendous profit in the last 5-10 years nevertheless after the economic crisis of 2019, crude oil prices dropped to record lows. Such volatility in prices disturbs the margins of manufacturing companies.

Since most of the base oil types are mineral oil-based, which are sourced from oil prices. Thus, the prices of base oil highly depend on crude oil prices. With high crude oil prices, manufacturers enjoy elevated margins, but the price change has a huge impact on the base oil market.

Comparative View of Adjacent Base Oil Markets

Base Oil Market :

Attributes	Base Oil Market
CAGR	2.3 %
Market value (2032)	US$ 44 Billion
Growth factor (2032)	Rapid industrialization in developing countries is propelling the demand for lubricants in various end-use industries. Hence, driving the market growth of the base oil market.
Opportunity	Demand for high-performance lubricants and process oils is growing at a fast pace in the global tire and rubber industry. This is expected to offer lucrative growth opportunities to the base oil market during the forecast period.

Industrial Lubricants Market :

Attributes	Industrial Lubricants Market
CAGR	4.7%
Market value (2032)	US$ 106 Billion
Growth factor (2032)	Rapid industrialization in developing countries followed by a rise in the number of trade activities fuels the demand for industrial lubricants.
Opportunity	Demand from the power generation sector is going to present lucrative prospects for the industrial lubricants market.

Mineral Oil Market :

Attributes	Mineral Oil Market
CAGR	4.5%
Market value (2032)	US$ 6 Billion
Growth factor (2032)	Demand from end-use industries such as automotive, textile, construction, industrial, medical, pharmaceuticals, electronics, and consumer goods are propelling the growth of this market.
Opportunity	Technological breakthroughs, especially in the field of refining and ultra-purification, is expected to offer better opportunistic prospects for the mineral oil market.

Country-wise Analysis

How opportunistic are Growth Prospects across the U.S. Market?

U.S Base Oil Market to Earn Additional Points; backed by Latest Advancement in Automotive Industry

Being highly advanced in industrial and automotive sectors, the North American base oil market is forecast to steady growth in the coming years. Automotive oils being highly preferred due to their physical and chemical properties will maintain the lead in the North American base oil market throughout the forecast period.

Upsurge in transportation activities and ease in travel ban after the pandemic have supported the automotive industry, fuelling automotive sales. Considering these factors, the demand for automotive lubricants is also likely to increase.

Based on the recent analysis, automotive sales increased by nearly 25% in Q1 & Q2 of 2021 in Canada. According to Fact.MR, metalworking fluids are expected to exhibit the highest growth in revenue in the North American base oil market in near future. The projected market value for base oil is likely to reach nearly US$ 16.2 Billion by the end of 2032 which is estimated at nearly US$ 12.3 Billion in 2021, following a CAGR of 2.5%.

Why are Base Oil Providers Venturing into China?

Augmented Application of Re-refined Base Oil to Place Asia Pacific at the Topmost Spot

The automotive industry coupled with the advancement in the industrial machinery manufacturing sector is spurring the Asia Pacific base oil market growth. The mounting motorization rate in emerging countries is pushing the demand for lubricants in this sector which will, in turn, reinforce the demand for base oil.

Moreover, key manufacturers are making investments in the rapidly evolving end-use sectors such as power generation, manufacturing, logistics, automotive manufacturing, and others in nations such as China, India, Japan, and South Korea, thereby, propelling demand for base oil.

Fact.MR forecasts that the Asia-Pacific base oil market is estimated to record a CAGR of 3.3% between 2022 and 2032 and the valuation is anticipated to surpass US$ 5 Billion by 2032. During the historic period, the market value was estimated at nearly US$ 3.5 Billion in 2021. The market size is expected to expand in Asia-Pacific, owing to the economic growth in the nations such as South Korea, China, and India.

Why Europe is Becoming a Lucrative Region for Base Oils Market?

European Region to Spearhead the Lubricants Segment in the Upcoming Future

The rising demand for fuel-efficient vehicles coupled with the various stringent regulations regarding automotive fuel policy is bolstering the Europe base oil market growth. For instance, according to the regulations by European Union Automotive Fuel Policy, the average CO2 emission level for new passenger cars must not exceed 130 grams per kilometer.

As a result, the increasing demand for the development of highly efficient lubricants manufactured from base oils is rising the base oil market value rapidly.

According to Fact.MR, Europe will continue to be a lucrative market for base oil manufacturers and is likely to reach a valuation of nearly US$ 16 Billion, following a CAGR of 2.5% throughout the assessment period.

Country-wise Value CAGRs for Base Oil (2022-2032)

Country	CAGR
U.S	2.5%
U.K	2.7%
China	3.3%
Japan	3.1%
South Korea	3.4%

Category-wise Insights

Which Grade Type is Most Preferred in the Base Oil Market?

Based on Grade, Type V Witnessed Highest Traction Across the Globe

According to Fact.MR, grade-wise group V base oils (except naphthenic) followed by naphthenic base oils will exhibit the highest growth in market volume throughout the forecast period.

Naphthenic base oil has a low pour point, low wax, low aromatic content, and high solvency, making it widely required for a broad range of applications such as producing adhesive & sealants, gear oils, and printing inks, oil extender polymers, and others.

Due to its diverse range of applications as well as the expanding end-users such as process oil manufacturers, metalworking fluid manufacturers, and others, the group V base oils are gaining rapid traction all over the world.

According to Fact.MR, group V base oils will witness the highest growth in revenue followed by naphthenic, group IV, and other base oils such as group I, group II, re-refined, and other base oils. Fact.MR estimates that the annual growth rate of the aforesaid segment is estimated to remain close to 2.5% throughout the forecast period.

By Application type, which Base Oil is expected to Dominate?

Application-wise, automotive fluids such as lubricant, gear oil, transmission fluid, power steering fluid, and brake fluid continue to be the prominent segments. With the growing automotive industry, automotive fluids are experiencing a substantial surge in demand from various automotive systems such as engine oil systems, automatic transmission systems, power steering systems, automated cooling systems, and brake systems.

The rising demand for electric vehicles is further catering to the market growth. According to Fact.MR, automotive fluids are expected to lead other application-wise segments and document a CAGR of 2.4% during the forecast period.

Start-ups in the Base Oil Market -

• Nuspec Oil, a United Kingdom-based company developing biobased base oils and advancing the commercialization of novel rapeseed oils, was among five start-ups selected by the Repsol Foundation in the latest call of its Entrepreneurs Fund. Benefits will cover a year of financial support, along with advice from and testing opportunities at Repsol.
• Founded in 2019, Nuspec Oil concentrates on the development of biobased base oils. According to its website, the company’s products include base oils and vegetable oils. Its two high-viscosity base oils are marketed as suitable for formulating marine and industrial lubricants demanding high levels of biodegradability.
• Nuspec claims its specialty rapeseed oils contain less than 5% of polyunsaturated fatty acids, which increase its stability at high temperatures. High levels of monounsaturated or very long-chain fatty acids in the oils also make them more suitable for demanding applications, according to Nuspec.

Market Competition -

Prominent Base Oil providers are dependent on partnerships, collaborations, acquisitions, and new software launches to stay afloat in the global market. Constant innovations to ensure a seamless client-customer relationship are the main focus of prominent market players.

• In July 2020, SWEPI LP, a subsidiary of Royal Dutch Shell has completed the sale of its Appalachia shale gas position to Seneca Resources Company, LLC and NFG Midstream Covington, LLC, each of which is a subsidiary of National Fuel Gas Company to acquire USD 541 million to invest as an asset for quality base oil production.
• In October 2020 Indian Oil Corporation signed a pact with the Indian Institute of Science (IISc) to develop hydrogen generation technology based on biomass gasification.

Key Segments Covered in the Industry Survey

• By Grade :

  • Group I
  • Group II
  • Group III
  • Group IV(PAO)
  • Group V (ex. Naphthenics)
  • Naphtheniccs
  • Re-refined

• By Application :

  • Automotive Fluids (Lubricant, Gear Oil, Transmission Fluid, Power Steering Fluid, Brake Fluid, Others)
  • Process Oils (Rubber Process Oils, Textile Process Oil)
  • Industrial Oils (Transformer Oil, Turbine Oil, Food Grade Oil, Others)
  • Metalworking Fluids (Emulsions, Neat Oils)
  • Hydraulic Oils (Petroleum-Based, Biodegradable)
  • Others

• By Region :

  • North America
  • Latin America
  • Europe
  • Asia Pacific
  • Middle East & Africa