From the start of the pandemic, base oil prices in the U.S. have reached record highs. Since February 2020, posted price gains range from $2 per gallon to nearly $5 per gallon as of May 2022. Prices have greatly fluctuated over this period of time, however, experts anticipate the high prices may remain in effect for some time. The Russian invasion of Ukraine has played a role in the most recent price spike, causing crude prices to soar, leading to a ripple-effect of price increases for fuel and base oil. The subsequent sanctions and embargos of Russian exports have deeply strained the world’s supplies, driving prices to unprecedented levels.
Soaring diesel prices continue to have a deep impact on all facets and stages of the market, with demand forcing refiners to shift focus to distillates, leaving base oils on the proverbial backburner. As a result, supply can’t meet demand and prices continue to rise until the two can balance out. ICIS (Independent Commodity Intelligence Services) anticipates US CPI inflation to have peaked in the second quarter of 2022 and continue to drop through 2023, which could provide some relief to the base oil industry and the market as a whole.