Conventional Oil Market Size Projected to Generate a Revenue of $4,690.2 Mn by 2031

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The Global Conventional Oil Market Size is predicted to be valued at $4,690.2 million by 2031, surging from $2,494.0 million in 2021, at a CAGR of 6.4%.

Impact Analysis of COVID-19 on the Conventional Oil Market

The conventional oil industry experienced a negative impact during the COVID-19 pandemic. The pandemic has greatly affected the oil & gas industry owing to import-export restrictions and an increase in oil prices. The oil exporting countries faced a huge impact owing to economic contraction led by the COVID-19 pandemic and oil market collapse. Also, in the year 2020, the oil & gas revenues for several key oil manufacturing companies declined by almost 85% resulting in huge economic losses. Also, a decline in fossil fuel demand owing to the growing need for decarbonization impacted the overall oil industry including the conventional oil market demand. Also, the countries that are majorly dependent on oil exports such as Iran, Iraq, Timor-Leste, and Libya were extremely vulnerable to the market volatility that negatively impacted the conventional oil industry growth during the pandemic.

Global Conventional Oil Market Analysis

The growth of the conventional oil market share is attributed to its cost-effectiveness since it requires very less processing before the refining process, which helps in the development of value-added products. Although synthetic oils are more commonly found on store shelves, conventional oil is still preferred by people due to its ease of availability. Conventional oil is better for an older engine as the use of synthetic oil can lead to the cracking of oil valves leading to leakage. Several car manufacturers recommend the use of conventional oil as synthetic oils are usually recommended for high-end cars and vehicles. Conventional oil is largely used by car manufacturers during the assembly of vehicles in the factory. These aspects are anticipated to drive the conventional oil market share in the upcoming years.

Synthetic oils act as a substitute for conventional oil, which is anticipated to restrain the conventional oil market growth. This is because synthetic oil is derived artificially and has fewer emissions. Also, synthetic oil offers enhanced oil & fuel economy with enhanced engine protection from lower friction. These factors are projected to hamper conventional oil market share growth during the forecast period.

Conventional oil is being majorly used in new cars as well as in older cars, which is projected to generate excellent conventional oil market opportunity. For instance, in the manufacturing of new cars, conventional oil is used during the assembly of vehicles in the factory. Also, conventional oil is a good choice for old cars that were manufactured before 2000. In addition, conventional oil can be efficiently used with upgraded vehicles. Hence, if the user has the habit of upgrading the cars frequently, conventional oil is a viable option. This is because, for new cars, the break-in period is around 5,000 miles hence regularly upgrading cars to a new model will not provide the car with sufficient time for necessitating the use of synthetic oil. These factors are anticipated to boost the conventional oil market demand in the future.

Global Conventional oil Market, Segmentation

The conventional oil market is segmented on the basis of type, sulfur content, end-user industry, and region.

Type:

The type segment is further classified into light distillates, middle distillates, heavy ends, and others. Among these, the middle distillates sub-segment accounted for the dominant market share in 2021. Middle distillate or gas oil is produced by refineries via a distillation process that provides the fractional separation of crude oil. The middle distillate is commonly known as gas oil which is majorly used in heating oil, lighting, diesel fuel, and jet fuel. The optimization of middle distillates needs testing for determining aromatic content, sulfur species content, and boiling point distribution. It is known as middle distillates because the products are removed at mid-height in the distillation tower during the multi-stage thermal separation process. Depending on the type of oil, the yield of middle distillates is usually between 24% to 40%.

Sulfur Content:

The sulfur content segment is further divided into low sulfur and high sulfur. The high sulfur sub-segment registered the dominant revenue share in 2021. The growth of high sulfur content in conventional oil is attributed to high operational efficiency that adheres to high safety standards cost-effectively. The high sulfur content in conventional oil offers oxidation stability that can boost engine performance. This leads to high viscosity index making the synthetic oil more resistant to temperature changes. High sulfur content endures higher flash points that make conventional oil extremely suitable for high-temperature applications. These factors help in meeting the conventional oil demand and safety concerns which are anticipated to boost the market growth during the forecast period.

End-user Industry:

The end-user industry sub-segment is majorly divided into automotive, chemical, power, industrial, and others. Among these, the automotive sub-segment acquired a dominant market share in 2021 and the power sub-segment is estimated to grow at a significant rate during the forecast period. Conventional oil plays a major role in the automotive industry where it is used to offer better lubrication as the engines are exposed to varying temperatures and gradual wear & tear. The use of conventional oil ensures that the engines are lubricated properly to ensure their smooth functioning and enhance their life span. Conventional oil is used owing to the continuous friction of mechanical parts and exposure to high temperatures. To optimize engine performance and efficiency, conventional oil is used to offer space between the piston and the cylinder. These factors have led to a positive impact on the demand for conventional oil in the automotive sector in recent years.

Region:

The conventional oil market for the Asia-Pacific region is projected to grow at the fastest rate during the forecast period. This growth is majorly attributed to the presence of leading automotive manufacturers in countries namely China, Japan, India, and others. China leads the world in terms of manufacturing output and vehicle sales, and domestic vehicle production is estimated to reach 35 million by 2025. China is one of the leading automotive markets which represents approximately 30% of global sales. This is majorly owing to the extensive support offered by the Chinese government to boost the growth of the domestic automotive industry. For instance, Made in China 2025, majorly focuses on raising the domestic automotive vehicles market. Furthermore, an increase in foreign investments, lower tax subsidies & exemptions, and low entry thresholds are some of the major initiatives adopted by the Chinese government. By the end of September 2021, the car market in China reached a sales volume of 18.6 million. Such rapid growth in the automotive industry across China is in turn driving the demand for the conventional oil market.

Key Players in the Global Conventional Oil Industry

Some of the leading conventional oil market players are

• BP
• Chevron
• Eni
• ExxonMobil
• Shell
• Total
• CNPC
• Equinor
• Petrobras
• Repsol

For instance, in December 2022, BP, the leading oil & gas company acquired Archaea Energy Inc., the renewable natural gas provider to boost the strategic bioenergy business of BP.