There was a sense of uncertainty in base oils market related to the discovery of the new coronavirus strain known as Omicron. The new variant prompted many countries to close borders and implement travel restrictions to reduce the mutated virus’ spread. Airlines cancelled hundreds of flights as a result, and this may lead to a drop in jet fuel consumption, which in turn may prompt refiners to reduce run rates once again as they had in the early days of the pandemic. Crude oil prices slumped to multi-year lows as soon as news of the new variant was announced.
A recent surge in coronavirus cases in Europe had resulted in a few countries reimposing lockdowns and other measures. This situation and the release of strategic crude reserves in several key oil consumer countries had already impacted crude oil and refined product prices over the last couple of weeks, lifting some of the upward feedstock pressure on base oils.