Frankfurt, Germany: The European Union finally reached an agreement on an embargo on Russian energy and petroleum products. However, the Union decided to exclude four E.U. Members - Hungry, Czechia, Croatia, and Slovakia, as the inland pipe system directly feeds all the country's refineries and hence unable to arrange an alternative means of Crude Oil in the short term. Several analysts strongly believe that the ban on imports of Russian products will considerably affect the quantities of Base Oils exports through the Baltic nations of Latvia and Lithuania.

Several upstream and downstream businesses dependent on the Russian supplies, followed by the Russian ownership, observed a severe backlash with the persistent collapse in their financial health. In response, several buyers and the end-users in Europe and U.K. have to reconsider supply options in the forthcoming period. Although, the current Base Oils demand outlook is passing through a quieter period, as the holiday season and reduces operational rates weighed over the blending operations across the region until the end of the third quarter of 2022.

As a ripple effect, the group I demand has dropped tremendously, whereas the demand for group II is in a much healthier situation and is foreseen to improve further. However, the market outlook for Group III is staggering on a stable trend. In the last couple of weeks, despite softened Crude Oil offers by USD 5-6 per barrel, it didn't levy any impact on the quotations of Base Oils. A significant market source that the European refiners were struggling to meet the demand after the European players were hesitant to procure the Russian cargoes in the Black Sea, and arranging the alternative supply will take some time.

As per the ChemAnalyst pricing intelligence, the market for the Group I Base Oil sales stabilized in the past few weeks. At the same time, a field correspondent informed that Eni's Livorno Base Oil unit restarted production gradually after its declared maintenance shutdown last year. Therefore it is anticipated that the Base Oil prices in the European market will likely observe a bullish sentiment in the short term.