Base Oil is the name given to lubrication grade oils initially produced from refining crude oil (mineral base oil) or through chemical synthesis (synthetic base oil). Base oil is typically defined as oil with a boiling point range between 550 and 1050 F, consisting of hydrocarbons with 18 to 40 carbon atoms. This oil can be either paraffinic or napthenic in nature depending on the chemical structure of the molecules.

In general, only 1% to 2% of a barrel of crude oil is suitable for refining into base oil. The majority of the barrel is used to produce gasoline and other hydrocarbons.

Lubricating oil is produced by “Blenders and Compounders” who combine base oil with 1% to 20% application-specific chemical additives, which enhance the performance of the base oil. The “compounded” Lubricating oil is then packaged and sold to end users.

The refiners, who manufacture and sell base oil, and the Blenders/Compounders, who manufacture and sell lubricating oil and are not always the same entities, although they can be. Most of the base oil they produce, they use. The amounts they don’t use, they sell through large commodity markets to “Independent” Blenders and Compounders. These Blenders and Compounders are called “independent” because they do not produce their own base oil but rather buy it from a refiner.