We Are All in This Together
For the past four months, most of the world has been consumed by concerns about the relentless advance of the Covid-19 pandemic; its effects on people’s lives and the economy are difficult to quantify.
The outbreak has spawned a grim economic outlook, with the collapse of crude oil values and faltering businesses throughout the supply chain showing just how tightly connected everything and everyone is.
The pandemic’s impact on the base oils and lubricants markets is deeply linked to the way the crisis has fundamentally changed everyday life. Efforts to contain the spread of the virus have led to strict movement restrictions and lockdowns around the world, resulting in a significant reduction in driving, both of public and private vehicles.
Airlines, ship operators, and bus and truck companies have reduced the routes they cover and the frequency of service, leading to a slump in gasoline, diesel, gasoil and jet fuel consumption. This contributed not only to the fall in crude oil values but also to a huge decrease in lubricants demand.
Oil figures were further depressed by a price war between Saudi Arabia and Russia, which came to an end when OPEC+ countries agreed to cut overall crude production by 9.7 million barrels a day in May and June.
The faltering fundamentals triggered hefty base oil posted price decreases of 40, 58 and 60 cents per gallon in North America, implemented between March 24 and April 1.
This was the second round of decreases within a month, as producers had already marked down prices between March 1 and 10.
Naphthenic producers also completed a series of decreases of 20 to 25 cents per gallon during the first half of March, driven mostly by the sharp drop in feedstock values and declining market activity.
On the bright side, the crisis has thrown people together to fight a common enemy, and innumerable acts of kindness have surfaced. From individuals making face masks at home or preparing care packages for healthcare workers, to large corporations–including several oil companies–donating millions of dollars to purchase medical equipment and to help those who have lost jobs because of the outbreak, it appears that everyone has a part to play in overcoming this evolving tragedy.