Ongoing geopolitical tensions, particularly the Israel-Iran conflict, are adding another layer of uncertainty to the market. This has led to cautious buying behaviour, with many Indian buyers showing hesitation in committing to bulk international purchases. Instead, a growing number are preferring to source from the local market to minimise risk and avoid exposure to potential supply chain disruptions.
As a result, buyer sentiment remains fragmented, with market participants adopting different procurement strategies based on their risk appetite and inventory needs.
Current Price Indications (CIF Asia, June 2025)
Group 1 SN150: Currently assessed at around $720–750 per metric ton (CIF)
Group 2 150 N Grades: Carrying a premium of approximately $20–40 per ton over Group I, with prices ranging between $760–780 per metric ton.
A notable observation is that each base oil category exhibits distinct market behaviour, with noticeable variations in supply-demand equilibrium across different groups. While Group I, Group II, and other segments all operate within the broader lubricants market, their individual supply chains and end-use sectors cause them to respond differently to market fluctuations. As a result, price movements and demand patterns are not uniform across all groups.
The ongoing import dependency, combined with freight volatility and geopolitical risk, is expected to keep the market cautious in the near term.
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Base Oil Grades and Their Applications
Short Key Points
Rising Prices: Driven by higher demand, import reliance, freight costs, and crude oil prices.
Geopolitical Instability: The Israel-Iran conflict is driving risk-averse purchasing, prompting buyers to prioritise local supply over international imports.
Varied Buying Strategies: Procurement decisions differ based on risk tolerance.
Group-wise Market Differences: Each base oil group (I–V) shows unique pricing and demand behaviour.
Conclusion: The Indian base oil market is currently navigating a complex mix of rising demand, increasing import reliance, and geopolitical risks. Price volatility is expected to continue in the near term, driven by global crude trends and freight costs. Buyers remain cautious, adjusting sourcing strategies to balance cost control with supply security. Going forward, market participants will need to closely monitor international developments, freight logistics, and regional supply dynamics to manage procurement and pricing risks effectively.
ALCHEMPro News Desk (VK)
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