Base oil, base oil everywhere, nor any drop to buy*
*With apologies to Samuel Taylor Coleridge, and his epic poem “The Rime of the Ancient Mariner”
By Ian Moncrieff, Vice President, Energy
Since the onset of coronavirus in early 2020, the base oil business has been thrown into disarray. While crude oil prices have increased modestly, with Brent around $55/Bbl in February 2020 and now in the low $60 range, base oil prices have mushroomed. In February 2020, European Group I export spot prices were in the low-mid $600/ton range between SN150 and brightstock. Today, solvent neutral cash market prices are double, and brightstocks almost triple, their levels of just a year ago.
The causes of such an explosion in base oil prices are not obvious and go beyond the confines of the base oil business itself. This paper is an attempt to rationalize the complexities.
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