Global economic growth, population trends, emissions standards and changing lubricant requirements will continue to shape base oil demand and the choice of base stocks, according to ExxonMobil.
“These are critical topics as producers navigate intensifying global competition, regional market realignments and changing customer demands,” said Laura Pottorf, ExxonMobil’s global marketing manager for basestocks and waxes. She said the industry is moving toward higher-performance base oils, particularly for energy-efficient automotive and industrial applications.
Pottorf said uncertainty over energy demand, technology and product requirements means base oil producers need to remain flexible as they plan future production. “Whether we’re responding to new specifications or regional markets, the decisions that we make today will shape how well we are positioned to meet tomorrow’s challenges,” she told delegates at an industry event in New Jersey.
ExxonMobil’s latest energy outlook projects a global population increase of about 1.5 billion by 2050, while global GDP nearly doubles. Emerging economies are expected to account for more than half of global GDP, up from about 40% today, while per-capita income rises by about 80%. Energy demand in those economies is projected to increase by 25% as living standards rise.
At the same time, ExxonMobil projects global CO₂ emissions will decline by 25% by 2050. Pottorf said industrial and commercial transportation will account for about 65% of global energy use.
Electrification, hydrogen, nuclear power, biomass and other renewable energy sources will contribute to lower-emission energy production, but ExxonMobil expects oil and natural gas to remain the largest energy sources in 2050, together accounting for more than half of global energy supply. Coal consumption is projected to decline.
Pottorf said higher living standards and industrialization will increase demand for higher-quality products, including more efficient base stocks and lubricants.
ExxonMobil expects base oil demand to decline in the Americas and Europe while increasing in the Middle East, Africa and Asia Pacific, driven by infrastructure development and economic growth. In the U.S. and Canada, demand is projected to decline by slightly less than 1% annually over the next decade.
Industrial and marine lubricants are expected to benefit from manufacturing growth, while commercial transportation will support demand for higher-performance lubricants. Increasing efficiency will also drive demand for lower-viscosity engine oils.
North American passenger car engine oil demand is expected to shift toward 0W grades, increasing the need for Group III and Group IV base stocks. Group II is expected to remain important, particularly in Latin America and for the broader North American market.
Pottorf said 0W grades will eventually account for the majority of passenger car engine oil demand. “Group III base stocks will be necessary for the majority of these products, with a sizable component of Group IV for higher-performing applications,” she said.
She added that faster adoption of lower-viscosity oils would increase demand for Group III+ and Group IV production.
Changing demand for gasoline, diesel and jet fuel will also affect refinery economics and product slates. For base oil producers, this could increase the need for higher-quality products while maintaining reliable supplies of Group II, which continues to account for much of the market.
Pottorf said internal combustion engines will remain in use as hybrids expand, supporting continued engine oil demand. Future refining investments are likely to focus on expansions and reconfigurations that provide greater flexibility between Group II and Group III production, while trade flows will remain important for balancing regional supply and demand.
For lubricant blenders, she said, changing specifications and technology will require closer coordination with base oil suppliers and greater attention to future base stock requirements.
Since Pottorf’s presentation, the U.S.-Iran war and disruption to shipping through the Strait of Hormuz have further complicated Group III supply from the Persian Gulf. This has forced lubricant manufacturers that rely heavily on imports from the region to reassess sourcing and supply arrangements.