Process Oil Market

Market Definition

The market encompasses a wide range of petroleum-derived and bio-based oils used as processing aids in various industrial applications. These oils are formulated using base oils and performance-enhancing additives to achieve specific viscosity, solvency, and thermal stability characteristics.

Process oils are classified into aromatic, paraffinic, naphthenic, and non-toxic white oils, each offering distinct properties suited for different applications. They serve as key components in rubber processing, polymer manufacturing, adhesives, textiles, and the production of lubricants.

Additionally, they are widely utilized in the tire and automotive industries to enhance elasticity and durability, as well as in the agriculture and personal care sectors for specialized formulations.

Process Oil Market Overview

The global process oil market size was valued at USD 5.89 billion in 2023 and is projected to grow from USD 6.12 billion in 2024 to USD 8.47 billion by 2031, exhibiting a CAGR of 4.76% during the forecast period.

This growth is fueled by the rising demand from the tire and rubber industries, where it enhances performance and durability. Additionally, increasing investments in refinery expansions and upgrades are strengthening the supply chain for high-quality process oils. The shift toward sustainable and bio-based process oils is supporting market expansion by addressing environmental and regulatory requirements.

Major companies operating in the process oil industry are Chevron Corporation, Panama Petrochem Ltd., Shell Plc, Apar Industries Ltd., Eagle Petrochem, Orgchim Biochemical Holding, Gandhar Oil Refinery Ltd., TotalEnergies, HollyFrontier Refining & Marketing LLC, Behran Oil Company, ExxonMobil Corporation, Nynas AB, Repsol S.A, Sinopec Limited, and Indian Oil Corporation Limited.

The growing adoption of polymers in the automotive, packaging, and consumer goods industries is propelling the growth of the market. Process oils act as plasticizers and processing aids, improving the flexibility, stability, and workability of polymer-based products.

• In March 2024, CheeShine introduced modified cashew oil and non-food chain soybean oil, featuring high biomass content and free of polycyclic aromatic hydrocarbons (PAHs). These oils enhance processing with superior low-temperature properties, effective plasticization, and reduced rolling resistance. Their strong physical characteristics and compatibility with various rubber types make them viable alternatives to conventional plasticizers such as TDAE, esters, and polyether.

The increasing preference for lightweight materials in vehicle manufacturing and industrial applications is creating a strong demand for high-quality process oils.

Regulatory shifts toward sustainable and non-toxic formulations are prompting polymer manufacturers to integrate refined process oils, contributing to market expansion. Ongoing advancements in polymer processing technologies are further aiding market growth across multiple industries.

Key Highlights:

1. The process oil industry size was recorded at USD 5.89 billion in 2023.
2. The market is projected to grow at a CAGR of 4.76% from 2024 to 2031.
3. Asia Pacific held a share of 34.04% in 2023, valued at USD 2.01 billion.
4. The non-carcinogenic segment garnered USD 1.88 billion in revenue in 2023.
5. The tire & rubber segment is expected to reach USD 2.88 billion by 2031.
6. Europe is anticipated to grow at a CAGR of 4.78% through the forecast period.

Market Driver

Surging Demand from the Automotive Industry

The increasing demand for high-performance tires in the automotive industry is accelerating the growth of the process oil market. Process oils improve the elasticity, durability, and processing efficiency of rubber compounds, making them essential in tire manufacturing.

• According to a 2024 report by the U.S. Tire Manufacturers Association, total U.S. tire shipments are expected to reach 337.4 billion units, up from 331.9 billion units in 2023 and 332.7 billion units in 2019. This figure surpasses the previous record of 335.2 billion units set in 2021. Replacement tire shipments for passenger vehicles, light trucks, and trucks are projected to grow by 0.9%, 4.7%, and 8.9%, respectively, contributing to an overall increase of 5.4 billion units.

Stringent regulations on fuel efficiency and carbon emissions are prompting manufacturers to develop eco-friendly tires, fueling the demand for specialty process oils.

Companies are shifting toward low-aromatic and non-carcinogenic oils to comply with environmental standards. The steady rise in vehicle production, coupled with growing consumer preference for durable and fuel-efficient tires, is boosting market growth.

Market Challenge

Volatility in Crude Oil Prices

Fluctuations in crude oil prices pose a major challenge for the market, impacting production costs and profit margins. Since process oils are derived from petroleum, sudden price hikes or supply disruptions can lead to increased manufacturing expenses, affecting pricing strategies and market stability.

To mitigate this, companies are diversifying their raw material sources, investing in alternative feedstocks like bio-based oils, and optimizing refining processes to enhance efficiency. Additionally, long-term supplier agreements and forward contracts are being adopted to stabilize costs, ensuring a steady supply chain and reducing dependency on volatile crude oil markets.

Regulatory Shift Toward Environmentally Compliant Oils

Environmental regulations are reshaping the process oil market by driving the adoption of eco-friendly, low-aromatic formulations. Governments worldwide are enforcing restrictions on polycyclic aromatic hydrocarbon (PAH) levels in process oils, prompting manufacturers to develop sustainable alternatives.

The transition toward green manufacturing practices is accelerating demand for bio-based and hydrotreated process oils that comply with environmental standards. Industries are increasingly investing in non-toxic, recyclable oils to meet regulatory requirements while maintaining product performance.

The growing focus on sustainability is creating opportunities for process oil manufacturers to expand their portfolios with environmentally responsible solutions.

In July 2024, the Royal Society of Chemistry published a report introducing a new eco-friendly process oil designed for manufacturing high-quality tire tread. By incorporating bio-based materials and a recyclable organocatalyst, researchers have synthesized various acid-esterified soybean oils for use as process oils.

These newly developed bio-based processing oils have demonstrated high efficiency in producing styrene–butadiene rubber (SBR) composites, particularly for tire tread applications.

The adoption of these fully bio-based process oils is expected to create significant opportunities for reducing the environmental impact of rubber products while advancing the development of sustainable, high-performance tires.

Process Oil Market Report Snapshot

Segmentation	Details
By Type	Aromatic, Paraffinic, Naphthenic, Non-Carcinogenic
By Application	Tire & Rubber, Polymer, Personal Care, Others
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, UAE, Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

 Market Segmentation

• By Type (Aromatic, Paraffinic, Naphthenic, and Non-Carcinogenic): The non-carcinogenic segment earned USD 1.88 billion in 2023 due to global regulations restricting polycyclic aromatic hydrocarbon (PAH) content, increasing demand for safer, compliant alternatives in industries such as rubber, plastics, and adhesives.
• By Application (Tire & Rubber, Polymer, Personal Care, and Others): The tire & rubber segment held a share of 34.42% in 2023, attributed to the extensive use of process oils as plasticizers and performance enhancers in rubber compounding, improving elasticity, durability, and manufacturing efficiency in tire production.

Process Oil Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

The Asia Pacific process oil market share stood at around 34.04% in 2023, valued at USD 2.01 billion. The Asia Pacific region leads global tire production, with China, India, and Thailand as key manufacturing hubs. Major tire manufacturers in China, including Zhongce Rubber Group and Sailun Group, are expanding their production capacities to meet rising domestic and export demand.

In India, companies such as MRF and Apollo Tyres are investing in new facilities and R&D for high-performance tires. Thailand, a major exporter of natural rubber, is attracting increased investment in tire manufacturing.

• For instance, in October 2024, Continental announced an expansion of its tire manufacturing plant in Rayong, Thailand, increasing production capacity by an additional 3 billion units annually. The phased expansion involves a planned total investment exceeding $325 billion USD. The project is backed by Thailand’s Board of Investment under its Investment Stimulation Measure for Economic Recovery Scheme.

Additionally, China remains the world’s largest producer of plastics, with a growing emphasis on specialty polymers for automotive, packaging, and electronics applications. Process oils are widely used as plasticizers and extenders in polymer compounding, improving mechanical properties and flexibility.

Leading Chinese petrochemical companies, including Sinopec and PetroChina, are increasing the production of process oils tailored for high-performance thermoplastics. The country’s shift toward advanced polymer manufacturing, supported by government incentives, is supporting regional market growth.

Europe process oil market is set to grow at a CAGR of 4.78% over the forecast period. Europe’s well-established cosmetics, personal care, and pharmaceutical industries are contributing to the growing use of process oils in skincare formulations, medicinal ointments, and haircare products.

With a rising preference for clean-label and non-toxic ingredients, manufacturers are integrating high-purity mineral and bio-based process oils into their product formulations. The shift toward sustainable and dermatologically safe ingredients is further fostering innovation in process oil applications within these sectors.

Furthermore, European governments are actively promoting the adoption of eco-friendly industrial fluids and lubricants through policy measures and funding programs.

Initiatives such as Germany’s Sustainable Industrial Lubricants Strategy and France’s Green Manufacturing Action Plan are prompting industries to transition to low-emission and biodegradable process oils. These regulatory frameworks are pushing lubricant manufacturers to expand their portfolios with sustainable process oils.

Regulatory Frameworks

• In the U.S., the process oil industry is regulated under several federal laws, including the Toxic Substances Control Act (TSCA), which grants the Environmental Protection Agency (EPA) authority over reporting, record-keeping, and testing of chemical substances. Additionally, the Clean Air Act (CAA) and Clean Water Act (CWA) further regulate emissions and discharges from industrial facilities.
• In Europe, the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation is a comprehensive framework that addresses the production and use of chemical substances, including process oils, mandating risk assessment to protect human health and the environment.
• In China, the Regulation on the Control over Safety of Hazardous Chemicals (Decree No. 591) governs the management of hazardous chemicals, including certain process oils. This regulation requires companies to obtain safety permits and comply with safety standards.
• In Japan, the Chemical Substances Control Law (CSCL) regulates the manufacture, import, and use of chemical substances. Additionally, the Industrial Safety and Health Act (ISHA) imposes safety requirements for handling hazardous materials.

Competitive Landscape

The process oil industry is characterized by a number of market players that are implementing strategies focused on refinery expansions and upgrades to enhance the production of raw materials used in plastics and synthetic fibers.

Companies are investing in advanced refining technologies to improve efficiency and increase the yield of high-quality process oils required for polymer manufacturing. Upgraded facilities enable the production of low-aromatic and highly refined process oils, which are essential for producing synthetic fibers with superior durability and performance.

These strategic developments strengthen the supply chain for plastic and textile industries, supporting market growth by ensuring a steady supply of high-purity process oils tailored to evolving industry demands.

• In February 2025, Chevron is investing USD 1 billion to establish the Engineering and Innovation Excellence Centre (ENGINE) in India, aiming to leverage the country’s advanced engineering and technology expertise. This initiative supports Chevron’s global energy projects by driving digital transformation through AI, IoT, and edge computing. By enhancing efficiency in oil and gas production, carbon capture, and refinery operations, the centre strengthens the supply chain for high-quality process oils.

List of Key Companies in Process Oil Market:

• Chevron Corporation
• Panama Petrochem Ltd.
• Shell Plc
• Apar Industries Ltd.
• Eagle Petrochem
• Orgchim Biochemical Holding
• Gandhar Oil Refinery Ltd.
• TotalEnergies
• HollyFrontier Refining & Marketing LLC
• Behran Oil Company
• ExxonMobil Corporation
• Nynas AB
• Repsol S.A
• Sinopec Limited
• Indian Oil Corporation Limited

Recent Developments (Agreements/Expansion)

• In January 2025, Chevron Corporation announced the commencement of oil production from the Whale semi-submersible platform in the deepwater U.S. Gulf of Mexico. This development marks a significant milestone in Chevron’s expansion efforts, bringing the company closer to its target of producing 300,000 net barrels of oil equivalent per day in the U.S. Gulf of Mexico by 2026.
• In November 2024, Sinopec Corp and Saudi Aramco commenced construction on a refinery and petrochemical complex in Fujian province, Southeast China. The facility will feature a 320,000-barrel-per-day refinery, along with large-scale ethylene and paraxylene production units, and a crude oil terminal. Expected to be operational in 2030, it aims to supply 5 billion tons of petrochemical feedstock annually, enhancing the availability of essential raw materials for downstream industries.