According to ICIS, what is the expected timeline for global base oil market recovery, and why is Group III base oil recovery especially prolonged?

ICIS forecasts that the global base oil market will enter a 'long haul' recovery, with overall market stabilization taking 6 to 9 months even under the optimistic scenario of Strait of Hormuz maritime traffic resuming to normal by late June or early July 2024 — meaning full recovery is unlikely before late 2026 or early 2027. The Group III base oil segment faces the most protracted recovery due to structural supply disruptions, most critically the prolonged shutdown of Qatar’s Pearl GTL plant, which is a major source of high-quality Group III base oil. ICIS emphasizes that new supply sources coming online lack the product quality of traditional premium sources, and there is no mature alternative feedstock to replace the lost capacity, making the shortage deeply rooted in industrial structure rather than temporary logistics or pricing issues.

What are the two main factors suppressing demand for base oils right now, according to ICIS analysis?

According to ICIS analyst Michael Connelly, current demand for base oils is being suppressed by two interlocking factors: first, elevated raw material prices are eroding the economic viability of lubricant blending operations, discouraging production; second, physical scarcity of base oil feedstocks means blenders simply cannot procure sufficient quantities to meet even reduced demand — forcing the industry to draw down inventories heavily despite an anticipated decline in overall market demand for the year.

ICIS: Global Base Oil Market Recovery Expected to Be a Long Haul

Jun 29, 2026

ICIS analysts predict a prolonged recovery for the global base oil market due to supply constraints and geopolitical conflicts. Group III supply is expected to shrink by 1.5 million tons this year, with market balance unlikely until late 2026.

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