Russian demand for automotive engine oils stagnated at around 414,000 metric tons in 2022, with the lion’s share bought and stockpiled for future use as demand tumbled in response to a series of shocks, according to an industry analyst.
The Russian invasion of Ukraine backfired economically, with swift Western sanctions against the country’s banks, industrial sector and oil production and trade, while international oil majors such as Shell, ExxonMobil and TotalEnergies exited in protest, as did the main lubricant additive suppliers.
In 2021, the country’s demand for light- and heavy-duty engine oils still hadn’t returned to pre-pandemic levels of 530,000 metric tons, but indicators suggested the market was on a path for a recovery. But reaction to Russia’s invasion of Ukraine threw off that trajectory.
“During 2022 the engine oil market was very erratic and shifting,” Victor Pushkarev, senior analyst at the Moscow-based consultancy Autostat, told Lube Report last week.
The consultancy determines the volume of the motor oil market by the size of the active automobile fleet. In 2022, the number of on-road passenger cars and light commercial vehicles decreased by 0.2%, so the firm assumed that the motor oil consumption also decreased by 0.2%. Last year, estimated sales of motor oil for passenger cars and light commercial vehicles reached 270,000 tons), while this result for heavy-duty trucks was 144,000 tons.
“In the summer, the import of motor oils fell sharply, while in the second half of 2022 it reversed back, thanks to [government] imposed ‘parallel imports,’ mostly from Asia,” Pushkarev said. “By the year’s end, imports even exceeded the results for all of 2021.”
Under the parallel import program, the government occasionally updates a list of sanctioned products that may be imported and sold within the country without regard for trademark and copyright protections. This list, for example, includes some motor oil products of ExxonMobil and Shell.
Autostat found that during the summer the market faced severe shortages of Castrol, Mobil, Shell and Total lubes, all Western brands. “Towards the year’s end, the deficit for these products decreased, while the prices got much higher,” Pushkarev said.
As Lube Report reported in 2022, some of the products of Western international brands that exited the Russian market are still available in the Russian market, as imports from such countries as Turkey, Serbia or China.
The parallel import might have eased the blow caused by the isolation of the Russian economy from the global trade, “but the market faced extremely high price inflation for such products as lubricants, oil filters and oil change service at the car service locations. In 2022, the motor oil retail prices increased almost 100% on average [compared to the prices in 2021],” Pushkarev said.
The consultancy also found that 15% of the active motorists in Russia in 2022 stockpiled extra motor oil for future oil changes because the market fluctuated, and the prices jumped daily. “Taking this into account, in 2022 the consumption of motor oils was not equal to the corresponding sales,” he said.