High gas station prices are not the only problem drivers have to face due to the tense situation in the Middle East. The conflict there is beginning to have a strong impact on the motor oil market as well, with the effects of this being felt by car manufacturers and owners alike.
Experts warn that there is a shortage of the so-called base oils, which are the main ingredient of most lubricants used in the automotive industry. According to reports by the Argus Media agency, which monitors raw materials markets, German car manufacturers are already experiencing problems with the availability of this strategic product.
Lack of engine oil – where do the problems come from?
The problem is that the Gulf region is responsible for 15 to 20 percent of the world’s production of Group III base oils. The dependence of the European market on this region is even greater, with up to 72 percent of the imports of these raw materials to Europe last year coming from the countries of the Middle East. In the case of the USA, this indicator reached 47 percent.
Car manufacturers are looking for new suppliers
According to reports, some companies have already started looking for alternative sources of supply. If they don’t secure supplies quickly, car companies may be forced to cut production of internal combustion engine cars.
Gabriel Twining, base oil market expert at Argus Media, leaves no illusions. If car manufacturers do not find a solution and the situation in the region does not improve, production volumes will have to be reduced.
A shortage of group two base oils can also have very serious consequences. This is a product that is absolutely key to the entire transportation industry. It is used for engine oils used in buses and trucks in public transport, i.e. in virtually all supply chains.
According to experts, several suppliers have reported that they will run out of stock between the end of May and the beginning of June. Wholesale prices have already risen noticeably.
Why is there a shortage of base oils in Europe?
Asian refiners supply less base oil to Europe because they themselves have limited access to oil from the Gulf region. Added to this is the situation where European manufacturers now prefer customers from Asia, where they can get higher prices for their products.
Source: Actualno
