DETROIT – Base oil demand in the United States should increase slightly this year, but will remain significantly below pre-COVID-19 levels, an ICIS reporter told a recent industry conference here.
In the longer term U.S. demand has dropped even further – more than half from its peak in 1999, ICIS Senior Manager Editor for the Americas Amanda Hay said at Lube Expo North America on March 20.
Base oil exports from the country have risen significantly to take up some of the slack over that time span, she added, but may suffer under the tariff policies of President Donald Trump.
U.S. base oil demand has fallen relatively steadily since 1999, Hay said, when it peaked around 65 million barrels. By last year the number had fallen to around 28 million barrels, ICIS estimates, or 78,000 barrels per day. Demand did grow slightly early in the pandemic – in 2021 and again in 2022, she said, but fell sharply in 2023 and by a smaller amount last year. ICIS forecasts a minimal increase this year – or later.
“We do predict there will be slight rebound at some point,” Hay said. “It’s hard to say when.”
In the early 2000s, the vast majority of base oils produced in the U.S. were sold and used here, but exports have since expanded to the point that they now account for roughly a fifth of production. Hay noted that this growth has not kept pace with the decrease in domestic demand.
Mexico is by far the largest destination for those exports, receiving 46% in 2024, Hay said.
“That is at risk if the U.S. is putting tariffs on Mexico” and leads Mexico to counter with tariffs or other restrictions on American goods, such as petroleum products.