For the past few weeks, the Base Oil prices in the US market have remained unchanged due to the ongoing negotiations regarding the revised offered quotations. However, after holding relatively steady, the market finally snapped, experiencing a significant surge of 2.7% during the week ending March 2024. This uptick was attributed directly to the relentless rise in Crude oil prices, the key feedstock for Base Oil production which has placed immense pressure on production costs. With their margins shrinking due to the rising cost of raw materials, several players were forced to re-evaluate their pricing structures.  To maintain profitability in a tightening market, a significant number of paraffinic Base Oil producers and refiners implemented price hikes between March 15th and March 22nd, 2024.

After witnessing the wait-and-see approach, the Base Oil prices have finally surged by a greater margin during the week ending March 2024 on the back of revised quotations positively from the huge players due to rising feedstock Crude oil prices to settle at USD 1840/tonne from USD 1790/tonne Base Oil Group II H 600 FOB Texas, USA on 29th March 2024. The impact of these price adjustments varied depending on the specific Base Oil grades. The API Group I experienced a price jump of 20 cents per gallon. This significant rise highlights the disproportionate impact of rising crude oil costs on different Base Oil types. However, it's important to note that not all producers participated in this round of price adjustments. Major industry players like ExxonMobil and Paulsboro had already announced price markups back in February. This foresight effectively granted them temporary relief from the immediate cost pressures.

As per ChemAnalyst, the Base Oil market is expected to remain elevated during April 2024 ahead of an uptick in summer demand. Moreover, the transportation industry faces a new hurdle with the recent collapse of the Francis Scott Key Bridge in Baltimore, Maryland. This critical infrastructure failure, caused by a collision with a container ship, could significantly disrupt the flow of goods on the East Coast, potentially impacting Base Oil prices in the upcoming weeks. Looking ahead the recent surge in Base Oil prices raises concerns for various stakeholders within the US market as the higher Base Oil prices will certainly trickle down to the cost of finished lubricants, which are essential for the smooth operation of machinery across various industries. This cost increase could have a ripple effect, impacting sectors like automotive, transportation, and manufacturing.