Given that Brent oil values have traded close to 11-year lows, and many in the base oil market expect base oil prices to remain at current levels or slip lower in 2016, there is widespread consumer hesitation regarding future purchases.

A number of base stock buyers continue to secure small volumes to run daily operations and avoid the risk of acquiring too much inventory, whose value might slip in coming weeks. This trend was evident during much of the fourth quarter and is expected to persist in the first quarter, sources said.

Many buyers are also waiting to secure cargoes after the Chinese Lunar New Year in early February, as demand for finished lubricants is expected to improve because manufacturers start to stock product for the spring season.

Some suppliers remain hopeful that base oil prices may rebound then, but this can only happen if supply starts to tighten and crude oil prices edge up.

Another condition that will likely affect market sentiment is the potential inception of more Iranian base oils into the supply system once international sanctions are lifted. The availability of extra volumes at competitive prices could have an impact on prices in key Asian markets, such as India and China.

Likewise, Iranian crude oil is expected to return to international oil markets in the first quarter of 2016 if the International Atomic Energy Agency verifies that the country has complied with the Joint Comprehensive Plan of Action regarding the development of Iran’s nuclear capability.

According to media reports, Iran currently exports around 1.10 million barrels per day of crude, and there are estimates that the country could hike production by 500,000 bbl/d and gradually add another 500,000 bbl/d by the end of the year.

The additional Iranian crude oil volumes, together with OPEC’s determination at a late December meeting to continue crude oil production at unchanged rates amid mounting worldwide inventories, are expected to keep crude prices under pressure throughout the year, according to analysts.

Additionally, Iraq was heard to have approached PetroChina and ExxonMobil about investing in a multibillion dollar project to help boost output from a number of smaller southern oil fields, according to local media reports. Iraq’s South Oil Co. deputy chairman Basim Abdul Kareem said the decline in oil prices has affected the countrys ability to fund oilfield development, and the company was looking for foreign investments, the reports added.

This week, Brent futures retreated toward 11-year lows on Saudi Arabia’s oil minister’s comment that the country had no plans to cut back its output.

February ICE Brent Singapore futures were trading at $37.22 per bbl. in afternoon sessions on Dec. 30, compared to $37.70 per bbl. on Dec. 24.

As far as base oil assessments are concerned, given the New Year holiday during the week and the absence of many market players, trading remained subdued and prices were largely stable-to-soft on recent discussions.

A major Southeast Asian refiner decreased the list price for its API Group II grades twice in December, resulting in combined reductions of $40 per metric ton for its 150 neutral and $80/t for its 500N.

These movements led to adjustments of assessments on an ex-tank Singapore basis, although Group I values were not revised.

Within the Group I category, solvent neutral150 was gauged at $540/t-$570/t ex-tank Singapore, and SN500 at $620/t-$640/t. Bright stock was hovering at $970/t-$990/t.

Group II 150N values were revised down $10/t to $510/t-$530/t ex-tank Singapore, while the 500N was also down $10/t at $640/t-$660/t ex-tank.

On an FOB Asia basis, Group I SN150 was holding at $460/t-$490/t, and SN500 at $540/t-$560/t FOB. Bright stock prices were unchanged at $920/t-$950/t FOB.

In the Group II category, prices for 150N were assessed at $440/t-$460/t FOB Asia, while 500N was heard at $550/t-$580/t FOB Asia.

The 4 centiStoke and 6 cSt oils in the Group III segment were unchanged at $870/t-$900/t FOB Asia, while the 8 cSt grade was steady at $630/t-$650/t FOB Asia.

Shipping activity was also fairly hushed at the start of the new year, and few fresh inquiries emerged. In South Korea, a 5,000-ton to 10,000-ton parcel was still on the table for Onsan to Antwerp, Belgium, for second half of January loading. A 2,000-ton cargo was quoted for Mizushima, Japan, to Hong Kong for Jan. 3-7 lifting, requiring ship inspection report (SIRE).

Gabriela Wheeler can be reached directly atgabriela@LubesnGreases.com