Base Oil Market

The global base oil market size was valued at USD 20.4 billion in 2021 and is anticipated to expand at a compound annual growth rate (CAGR) of 4.3% from 2022 to 2030. The growth is attributed to the increasing utilization of engine oils from industries such as metallurgy, automotive, chemicals, heavy equipment, and power generation. The market is highly fragmented with the presence of a large number of highly innovative players. The competition is intense as the participants engage in maintaining their customers to have a competitive edge over each other. Companies are adopting collaborative business strategies to increase their productivity, provide highly regarded products to consumers, and expand their regional presence.

Base Oil is critically utilized in the lubricant oil formulation globally with widespread application across a multitude of industries. Group I base oils are majorly utilized in marine lubricants which are widely utilized in the shipping industry to protect and enhance the efficiency of engines and equipment. These are high-performance marine lubricants that require high viscosity base oils, specially designed to enable optimal performance in operations.

Currently, the automotive sector is one of the major contributors to base oils globally. The demand for lubricants in manufacturing vehicles is expected to show continuity in its growth, however, the trend of electric vehicles has reduced the after-sales growth for certain lubricants. Consumers are looking for standard and specialized products to satisfy specific requirements and thus lubricant manufacturers are investing in new product developments, especially for the automotive industry. The growing consumption of lubricant manufacturers is anticipated to propel the demand for base oils over the forecast period.

Developing economies such as China, India, Indonesia, etc. are driving the manufacturing sector across the globe. The growth is supported by the availability of raw materials, reduced infrastructure cost, and labor cost. Owing to these factors base oil manufacturers are also shifting and expanding their production units in developing nations.

The automotive oils application segment dominated the market and accounted for the largest revenue share of 42.9% in 2021. Its high share is attributable to increasing demand for greases, gear oil, engine oil, and others for lubricating automobile components. Globally, truck engines and automobiles are the major consumers, consuming over 20 million tons of lubricants per year, accounting for about half of the total lubricant use. With vehicle manufacturers pushing toward meeting pollution standards, the automobile market is anticipated to prompt oil companies to produce base oils.

Asia Pacific dominated the market and accounted for the largest revenue share of 50.6% in 2021. This is attributed to the presence of emerging economies and the increasing disposable income of people in the region making it an attractive market for lubricant manufacturers. Asia Pacific is one of the largest markets for base oil globally, with China being the dominant country in the region. China is projected to lead the Asia Pacific base oil market over the forecast period. The dominance is attributed to the increased use of automobiles and the rapid growth of the manufacturing industry in the country. The market in China is also supported by the accessibility of raw materials, increased foreign investments, rapid industrialization, and a growing population.