Base Oil Market By Group (Group I {Solvent-refined, Moderate performance}, Group II {Hydroprocessed}, Group III {Severely hydrocracked, Synthetic-like properties}, Group IV {Polyalphaolefins (PAOs), Fully synthetic}, Group V), By Type (Mineral-Based Oils, Synthetic Oils, Bio-Based Oils, Re-refined Oils), By Source (Crude Oil-Derived, Natural Gas-Derived (GTL - Gas to Liquid), Renewable Sources (Bio-Based)), By Packaging (Bulk, Drums, IBC (Intermediate Bulk Containers), Cans & Bottles), By Distribution Channel (Direct Sales, Distributors, Online Sales, Retail Outlets), By End-User (Automotive, Industrial Manufacturing, Power Generation, Construction, Agriculture, Others), Global Market Size, Segmental analysis, Regional Overview, Company share analysis, Leading Company Profiles and Market Forecast, 2025 – 2035

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Industry Outlook

The Base Oil Market accounted for USD 22.34 Billion in 2024 and USD 23.52 Billion in 2025 is expected to reach USD 39.43 Billion by 2035, growing at a CAGR of around 5.3% between 2025 and 2035. The Base Oil Market of the Chemicals and Materials domain refers to the businesses that deal in the production and marketing of base oils, which are mainly raw materials employed in the production of lubricants for automotive, industrial, and marine purposes. Base oils are obtained after refining of crude oil or through a chemical process and are placed under different groups (Group I to Group V) depending on properties such as Sulfur content, saturation levels, and viscosity index. The market is gradually expanding due to surging demand for high-performance lubricants, the development of refining technologies, and growing knowledge of fuel economy and engine safety. With industries evolving and embracing more energy-efficient machines, there is an increasing demand for cleaner and more stable base oils, and this market is, therefore, a critical element of the global lubricants supply chain.

Industry Experts Opinion

‘’We are gradually, slowly, moving into a slacker environment. If producers produce what they do today, the increases come as planned, we don't see demand catching up with that.’’

• Torbjörn Törnqvist, CEO of Gunvor Group, at the Financial Times Commodities Global Summit

Report Scope:

Market Dynamics

Rising demand for high-performance lubricants in the automotive and industrial sectors fuels base oil consumption.

The increase in demand for high-performance lubricants in the automotive sector is one of the key drivers for the Base Oil Market. With the automobile advancing and the engine being formulated to be run at higher temperatures and speeds, the requirement for excellent quality lubricants, which can minimize friction, wear, and engine deposits, grows greatly. High-performance lubricants assist in optimizing performance, minimizing emissions, and enhancing engine life, which makes them paramount to modern motor vehicles. This propels manufacturers towards higher-grade and synthetic base oils that have higher stability and performance compared to conventional oils.

Improving the efficiency of the equipment and minimizing downtime on the part of the industrial sector also stimulates the need for high-performing lubricants. Heavy machinery and equipment are employed in manufacturing, construction, and mining processes in harsh environmental conditions and thus need lubricants that can perform under the same harsh environmental conditions. These conditions require base oils with excellent thermal stability, excellent oxidation resistance, and good load-carrying capacity. With industries striving to increase operational reliability and reduce maintenance costs, the consumption rate of high-quality base oils for lubricant production increases, favoring growth in the base oil market.

Increasing vehicle production and engine upgrades globally are boosting the use of Group II and III base oils.

An increase in vehicle production on the global front is driving the demand for Group II and III base oils in the Base oil market at a very high pace. The more cars that automakers make to respond to the increasing demands of consumers, the higher the demand for quality lubricants also increases. Group II and III base oils are known to have greater purity and perform better than Group I base oils are the choice in modern engine oils. These base oils provide better oxidation stability, better viscosity grade, and superior protection against engine wear, and are suitable for the most recent engines that demand better quality standards of lubrication. This is a trend in terms of the manufacture of vehicles, which directly leads to an increase in the consumption of these advanced base oils.

With the increase in the production of vehicles, there are continuous engine improvements and tighter emission laws that are prompting automakers to shift to more efficient and eco-friendly technologies. Current engines require lubricants that would be able to function optimally at higher temperatures and pressures; such can be offered by Group II and III base oils. These oils allow for improved fuel efficiency, fewer emissions, and more extended engine life, all well-suited to the changing automotive industry requirements. The demand for these base oils of higher grades continues to increase, leading to market growth within mature as well as emerging economies.

Fluctuating crude oil prices impact the cost structure of base oil production and pricing.

Variable crude oil prices are a major challenge to the base oil market in changing the cost of base oil production as well as pricing. Because crude oil is the main raw material in the base oils, any fluctuations in its prices will have a direct implication on the cost of production. When the price of crude oil increases, the cost of production rises, and most of the time, the producers pass on these costs to the buyers in the form of high base oil prices. This might lower profit margins for manufacturers, as well as increase the costs of end-users.

The volatility of the crude oil price has left market planning and budgeting by producers and consumers in doubt. Firms may be reluctant to acquire new production facilities or increase capacity because of concerns over variable costs of inputs. Such volatility may retard market expansion as actors seek out more stable options or products or hold out on purchases in times of high prices. Therefore, the volatility of the price is a significant restraint, which controls the growth of the base oil market.

Expansion of environmentally friendly and re-refined base oils opens new sustainable market segments.

The increasing market for environmentally friendly and re-refined base oils is a viable opportunity for the base oil market through the exploitation of the growing demand for sustainable and environmentally friendly products. With tighter environmental regulation and the increasing favor of greener alternatives by consumers, the market for bio-based and re-refined oils continues to grow. These products help firms to achieve sustainability standards and regulatory requirements by recycling used oils or using raw materials from renewable sources, hence reducing the impact on the environment.

The trend towards greener base oils not only helps in the conservation of the environment but also brings in new sources of revenue for manufacturers who adopt new advanced refining technologies. Companies could distinguish themselves in a competitive market by presenting sustainable products and targeting those customers who are interested in high-performance products while still caring for the environment. The expansion of these environmentally friendly components increases innovation and long-term stability regarding the market in the future, giving sustainability a significant role in the expansion of the base oil industry.

Emerging Asia-Pacific and Latin America markets offer significant growth potential due to industrialisation.

There exists great potential for the base oil market to grow in the emerging markets within the Asia-Pacific and Latin America regions, because of rapid industrialization and activities of the manufacturing sectors. Such regions start growing their automotive, construction, and manufacturing industries, and high demand for high-grade base oils arises to facilitate the lubrication of machinery and the performance of engines. Growth in industries creates the demand for effective and reliable lubricants, hence a good market for base oils.

Increasing infrastructure projects, as well as increased urbanization in these markets, drive consumption of base oils across industries. The rising trend is also brought about by the growing middle class and increasing vehicle ownership. Such a growth potential offers opportunities for base oil manufacturers to create a strong base in these regions through the provision of products based on local requirements and investments in distribution systems. Asia-Pacific and Latin America are emerging key areas for market players who are out to ensure long-term growth and profitability.

Segment Analysis

Based on Group, the Base Oil Market is segmented into Group I (Solvent-refined, Moderate performance), Group II (Hydroprocessed), Group III (Severely hydrocracked, Synthetic-like properties), Group IV (Polyalphaolefins (PAOs), Fully synthetic), and Group V. Group II base oils are the biggest segment in the market, given their combination of cost-effectiveness and performance. They provide improved oxidation stability and reduced volatility and are more widely applied in automotive and industrial lubricants for improved environmental regulation. Their accessibility from improved refining processes and the ability to be used in a wide range of applications make the category the most popular in terms of manufacturers and end-users.

Based on Type, the Base Oil Market is segmented into Mineral-Based Oils, Synthetic Oils, Bio-Based Oils, and Re-refined Oils. Mineral-based oils dominate the market, as they are traditionally available and are affordable when compared to other types, although there is a lower price. Although with the increase in environmental concerns and the emergence of synthetic and bio-based alternatives, mineral oils are highly used, especially in developing countries where cost sensitivity exists. Synthetic oils are also gaining ground in areas of use requiring outstanding performance and robustness, thus pointing to a change in the makeup of the market in a certain section of users.

Regional Analysis

The North American Base Oil Market is leading with advanced technology and is supported by huge consumption from motor vehicles, factories, and marine operations. There is an established refining infrastructure in the region and high adoption of Group II and Group III base oils because of tough emission norms and the move towards greener lubricants. The United States takes a leading role in the region, as giant companies invest in research and development to produce high-grade synthetic and semi-synthetic base oils. Demand is also affected by the increasing emphasis on fuel efficiency, cleanliness of engines, and sustainability of the environment. The presence of international lubricant brands and oil refiners still makes North America a big base oil importer and exporter.

The Asia Pacific Base Oil Market is fast growing due to increasing industrialization, an increase in vehicle ownership, and infrastructural projects in countries such as China, India, and Southeast Asian countries. This is the region that leads the world in base oil consumption, from the large population to the booming orientation in the area of transportation and the increasing need for lubricants in production and heavy machinery. The local production capacities are growing, but a lot of countries still rely on imports to satisfy the quality standards, particularly for Group III and Group IV base oils. The market has a lot of competitors, both global and regional players, investing in refineries and modern technologies. With increased sensitivity to the environment, Asia-Pacific is slowly embracing cleaner and more efficient formulations of base oils.

Competitive Landscape

The competitive landscape of the base oil market in the chemicals and materials space includes both global oil majors and specialized base oil manufacturers. The players with superior refining capabilities and global distribution networks dominate the market as key players, namely ExxonMobil, Chevron Corporation, Shell, TotalEnergies, and SK Lubricants. Such companies operate mainly in the production of high-performing Group II, III, and IV base oils to keep up with the changing industry standards and environmental regulations. Regional players in Asia-Pacific and the Middle East are also spending more on modernizing the process of refining to gain a larger share of the market. Strategic partnerships, capacity expansions, and innovation in synthetic and bio-based base oils are vital strategies that products are exploiting to enhance market presence and cater to increasing demand in automotive, industrial, and marine applications.

Base Oil Market, Company Shares Analysis, 2024

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Recent Developments:

• In January 2024, Shell Deutschland GmbH will convert the Wesseling refinery's hydrocracker into a Group III base stock production unit. These oils find application in high-quality lubricants such as engine oils and transmission fluids. The hydrocracker breaks heavy, low-quality hydrocarbons into lighter, high-quality products in a high-pressure, high-temperature reaction with hydrogen and a catalyst.
• In October 2023, Idemitsu Kosan Co., Ltd. teamed up with Saudi Aramco Base Oil Company -Luberef and entered into an MOU on the supply of refined lubricant base oil "Gr.III." With this agreement, it will build a new Grade.III production plant in Saudi Arabia to ensure long-term stable procurement of Gr.III base stock.

Report Coverage:

By Group

• Group I
  • Solvent-refined
  • Moderate performance
• Group II
  • Hydroprocessed
• Group III
  • Severely hydrocracked
  • Synthetic-like properties
• Group IV
  • Polyalphaolefins (PAOs)
  • Fully Synthetic
• Group V

By Type

• Mineral-Based Oils
• Synthetic Oils
• Bio-Based Oils
• Re-refined Oils

By Source

• Crude Oil-Derived
• Natural Gas-Derived
• Renewable Sources
• By Packaging
• Bulk
• Drums
• IBC (Intermediate Bulk Containers)
• Cans & Bottles

By Distribution Channel

• Direct Sales
• Distributors
• Online Sales
• Retail Outlets

By End-User

• Automotive
• Industrial Manufacturing
• Power Generation
• Construction
• Agriculture
• Others

By Region

North America

• U.S.
• Canada

Europe

• U.K.
• France
• Germany
• Italy
• Spain
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• Australia
• South Korea
• Singapore
• Rest of Asia Pacific

Latin America

• Brazil
• Argentina
• Mexico
• Rest of Latin America

Middle East & Africa

• GCC Countries
• South Africa
• Rest of the Middle East & Africa

List of Companies:

• ExxonMobil Corporation
• Royal Dutch Shell plc
• Chevron Corporation
• BP plc
• PetroChina Company Limited
• Saudi Arabian Oil Company
• S-Oil Corporation
• SK Innovation Co., Ltd.
• Indian Oil Corporation Limited
• Hindustan Petroleum Corporation Limited
• Neste Oyj
• Repsol S.A.
• Lukoil
• PT Pertamina
• Calumet Specialty Products Partners, L.P.

Frequently Asked Questions (FAQs)