Translating the effects into a base oil context is not simple, although some factors are easy to understand, such as the drop in the value of sterling against the dollar by around 10 percent. Overnight, this pushed prices for imported goods traded in dollars higher, including most base oils. Since the U.K. is a net importer of base oil, traders and importers started to pay higher sterling prices for these products.

In the short term, the U.K. will remain a full member of the EU until it decides to invoke Article 50 of the EU regulations relating to membership. During this time, all legislation relating to import/export of base oils will remain largely the same as before. Essentially, the Union Customs Code will remain in force, and traders will see few changes to these and other customs regimes, other than those already planned.

Once the government activates Article 50, the situation will become more complex. But this does not mean buyers and sellers of base oils in the U.K. will see legislation changing instantly. Indeed, Article 50 should be viewed as the start of proceedings to leave the EU and not as the finish line. It may take the U.K. several months, but more likely years, to agree on a new customs framework and to adopt new regulations.

It is not beyond the realm of possibility that the U.K. might mirror some current EU legislation to maintain stability and consistency. There are hopes that during this process, some of the more complex rules and regulations will be simplified by the team overseeing the changes. Therefore, buyers and sellers of base oils should plan to continue using the same system through April 2018.

Longer term, after the U.K. and EU member states agree to new laws and the U.K. parliament passes those laws, it becomes exceptionally difficult to predict what buyers and sellers of base oils will face. Preferential and Free Trade agreements may be very different, and may link the U.K. and new or emerging partners such as the U.S. and Canada.

There is no way of knowing what rules will govern base oil importers clearing imports from EU, or EU certificate-of-origin material. Cargoes may be cleared at the port or by some other self-regulated means. Regardless, these new processes likely will not come into effect until around April 2019 at the earliest.

It is hoped that some direction will be given during negotiations between the U.K. and EU. This would help traders to assimilate the processes required to import base oils into the country.

One interesting area is the granting of Authorised Economic Operator (AEO) status to companies importing or exporting base oils into and out of the U.K. This status will allow companies to clear cargoes without the need to put up bank guarantees to cover any duty exposure that may arise. AEO accreditation is becoming extremely important for international trade because countries such as U.S., China, South Korea and Japan all use a similar system. Therefore, traders should look for AEO approval for the future if they are trading with international locations.

The EU already negotiated Preferential or Free Trade agreements with several countries. Independently, the U.K. is keen to open up new possibilities with such agreements with a number of most favored nations such as U.S., Canada, China and India, which may substitute for the current access to EU negotiated treaties.

Base oil opportunities can become reality with cross-trade agreements being made between the U.K. and other countries. As the second largest economy in the EU, the U.K. could be an attractive partner for direct tariff-free relations with other nations. Coupled with a projected forecast growth rate of around 4.4 percent through to 2020, this prospect makes the U.K. an appealing partner without the cumbersome rules and regulations of the EU.

An independent U.K. will have to address a number of areas such as base oil regulations, including REACH, but these problems are not insurmountable and can be assimilated into normal trading activities over time. With the U.K. looking to leave the EU around Spring 2019, there appears to be an awful lot of work to do. Some players commented that it could take another five years before the country can at last take its place as an independent entity on the world commercial stage.

Base oil trading is a very small part in the grand scheme of things, but it is an extremely important area for the country as a whole; one that must not be sidelined as trivial. This activity is very important to those engaged in the industry, not just in the U.K. but also in EU and around the globe.