Lubricants demand in middle east

While Oil Prices Dive, Lubricants Demand Continues to Grow in the Middle East

The Middle East region produces almost one-third of global crude oil, with more than 30 million barrels coming from the region per day. Crude oil prices, which plunged from 2014-16 and recently hit lows not seen since the 1998 oil crisis over 20 years ago, have had a significant impact on the region’s economies. Local governments have already implemented diversification plans following the 2014-16 oil crisis and have started to open up their economies to more foreign direct investment (FDI), set up free trade zones and districts, and encourage their manufacturing sectors to grow. However, the COVID-19 pandemic caused shutdowns across the region with businesses, schools, and travel being suspended. This unexpected slowdown also halted major events such as the World Cup and new offshore drilling with global partners. While recent events and ongoing socio-political troubles have slowed the region’s growth, it continues to play an important part in global trade, as well as in the finished lubricants market.

The Middle East region accounts for just under 5% of global lubricants consumption. It consumes more than 1.6 million tonnes of finished lubricants and is home to base oil producers as well as blend plants that export to surrounding regions. Lubricant demand is split, with roughly half consisting of industrial lubricants and the other half split 60:40 between commercial and consumer lubricants.

Petromin, Shell, and BP are the top three lubricant suppliers in the market, accounting for over 40% of lubricant volume. However, the recent diplomatic crisis involving Qatar has shifted supply chains and brought greater supplier diversity into the region, while some majors have stepped out of select markets due to trade restrictions.

Lubricants consumption, despite COVID-19, socio-political issues, and the crude oil price crisis, is projected to grow at almost 2% CAGR out to 2024, slowing slightly for the following five-year period. This is partly due to the major infrastructure investment and growth in trade and manufacturing in the region. Energy production and crude oil and gas, however, will continue to remain a significant segment in the region and also drive lubricant consumption.

To gain more key insights from our just-published study Opportunities in Lubricants: Middle East Market Analysis,  covering automotive and industrial finished lubricant products; end-use industries; and trade classes, major suppliers, and market trends in the six Middle Eastern countries, REGISTER for a free webinar taking place on October 14, 2020.

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Posted in Energy.