The factors that influenced the current global and domestic shortage of base oil and lubricants all impacted on each other. 

Supply chain disruptions are nothing new, especially in the oil industry. Current events, natural disasters and a shortage of manpower can pop up uncontrollably and shake the foundation of the energy sector at any moment.

Covered In This Article:

The Perfect Storm
Putting Things In Perspective

The Perfect Storm

First, in 2019, the Lubrizol plant in France was completely destroyed by fire. The plant-made components used in the manufacturing of additives for lubricants led to shortages of additives for gear oil and hydraulic fluids.

Second, with the initial Covid-19 lockdowns in 2020, there was much less demand for transport fuels and refineries closed down or reduced run rates.

Third, also in 2020, the US hurricane season in the Gulf of Mexico, followed by the 2021 Texan polar freeze, crippled the US chemicals sector. Texas makes up 25% of the entire North American refinery capacity and 86% of all US chemical companies, so the US petrochemical industry was severely bottlenecked.

The US can move electricity back and forth between states, except for Texas. When the oil froze in Texan pipes, it took six months to disassemble entire plants to check every well, flange, valve and pump. Waiting for the oil to defrost wasn’t an option and this negatively influenced logistics

Fourth, the pandemic in Asia that keeps resurging has disrupted the global container system with three major city ports in southern China in hard lockdown.

Fifth, static harbours, port congestions and container shortages have led to delays, increased lead times and have caused record-breaking transport and commodity prices.

Sixth, the 2022 Russian invasion of Ukraine 2022 has reduced the availability of crude and the output of refineries.

And, locally, the cyber-attack in Durban shut down its port for more than a week.

The latest impact is the trend where global refineries switch to vapour gas production. Because the price of vapour gas has become so expensive, these companies are forced to concentrate on vapour gas to retrieve their costs. This throws a spanner in the lubricants supply chain.

So, the worldwide base oils landscape is critically tight with demand outpacing available supply.

The biggest importer of goods in the world is North America. With lockdown, the US has been 63 000 drivers short, and couldn’t get full containers out of the port fast enough to customers and return empty containers. The container crisis has spread to South Africa, and we are short of up to 6 000 truck drivers to transport offloaded goods.

Putting Things In Perspective

The local allocation of Group I, II and III base oils face price pressure. Astron Energy has taken measures to engage with our customers with allocation to minimise shortage impacts on their operations.

Just as lockdown led to local shortages of Marmite and the panic buying of toilet paper led to empty shelves, lubricant stakeholders should avoid the urge to stockpile. Rather speak to an Astron Energy technical specialist about any questions you might have here.