Petchem markets confronting geopolitical, economic challenges: ICIS CEO

Jeff Skelton, CEO of Independent Commodity Intelligence Services (ICIS)

Jeff Skelton, CEO of Independent Commodity Intelligence Services (ICIS), said global lubricants and petrochemical markets are facing major challenges due to geopolitical tensions and an economic slowdown.

Speaking to Argaam on the sidelines of the ICIS Middle Eastern Base Oils and Lubricants Conference in Riyadh, Skelton noted that global growth has long relied on China's 6% annual expansion. The recent declines in demand have further deepened the supply surplus issue.

The slowdown in Western markets such as Europe and the US was due to the reduced dependence on petroleum products. Meanwhile, emerging markets such as India, Africa, Southeast Asia, and South America are seeing rising demand, presenting growth opportunities despite global headwinds, the CEO added.

He warned that the petrochemical supply glut is straining market players, expecting the imbalance to last through 2030. Mergers and acquisitions, however, could help companies mitigate such challenges.

Saudi Arabia’s growing automotive sector boosts demand for high-quality lubricants for both local use and manufacturing, Skelton said, pointing to the Kingdom as a key market. Its strategic location and ample oil and gas resources make it a central hub for lubricant production and supply to global markets.

Oil prices have fluctuated recently, dropping from $100 to around $70-75 a barrel, Skelton noted, raising concerns among advocates for more sustainable economies.

He emphasized that these challenges could push up essential commodity prices, including food, driving inflation and curbing demand for petrochemical products.

Geopolitical tensions are complicating the global economic outlook, particularly for Western economies like Europe and the US, where trade barriers and reduced reliance on petrochemicals are slowing growth, he added.

New technologies like artificial intelligence are bound to play a key role in improving supply chain efficiency and addressing transportation and logistics challenges, according to Skelton.