Middle East Supply Chain Risks Fuel Base Oil Price Rise

Base oil prices in the Asian FOB market have risen again this week, but the tone across the trade remains uncertain. Suppliers point to a constrained flow of material out of the Middle East due to ongoing concerns tied to the US-Iran standoff.

The move is broadly tracking the wider crude complex, where Brent has climbed from $79 a barrel in early August to around $94 a barrel by August 20. This recovery is feeding directly into feedstock costs and reinforcing producers' reluctance to ease off current price levels.

Light-viscosity SN 150 and SN 500 grades have each firmed by roughly 20 cents on a per-tonne cost basis since the start of the month, while bright stock has moved up by a sharper 40 cents. This reflects tighter heavy-grade availability out of key Asian export hubs.

However, buyers are largely holding back in hopes that values soften, and producers are inclined to keep offers firm due to uncertainty over their own replacement costs. The result is thin trading volumes as sellers are reluctant to discount and purchasers are unwilling to commit to forward volumes at current levels.