Crude oil futures rose slightly on Monday morning on news that the European Union would impose another round of sanctions on Russian crude exports, fueling concerns about supply. However, prices were weighed down by United States’ fuel inventory builds and the potential economic repercussions of U.S. tariffs on imports from numerous countries.

The steep tariffs that U.S. President Donald Trump has threatened to impose on many of the country’s trading partners could have a devastating impact on developing nations whose economies largely depend on exports.

Group I

Prices for API Group I grades were stable to slightly firmer due to ongoing tight supply and demand, not only in Asia but globally. Fundamentals may be shifting as European demand has started to weaken with the summer holidays, and availability from the United States was expected to improve as plants returned to full production following planned turnarounds. While Group I products from these regions do not typically move to Asia, except for some Russian material heading to India, greater availability has allowed for additional exports to regions with limited Group I production.

In Asia, most Group I barrels originate in Southeast Asia and Japan, but spot supplies from Thailand have been limited due to a producer’s earlier turnaround and its focus on domestic needs. A second Thai producer began a scheduled turnaround this month, expected to last until mid-August. The company suspended offers ahead of the shutdown to build inventories. Recent and ongoing turnarounds in Japan and the Middle East have further tightened regional Group I supply.

Some buyers were waiting for a new tender from Indonesia, where a supplier had closed two tenders for Group I flexitank cargoes between late June and early July. Some of these cargoes were said to be secured for shipment within Southeast Asia.

In China, manufacturing data showed activity was better than anticipated despite the ongoing trade war with the United States, which is the world’s largest importer of Chinese goods, according to the World Bank. The official manufacturing PMI in China showed a contraction for the third consecutive month in June, but the Caixin manufacturing PMI unexpectedly expanded, reaching 50.4, up from 48.3 in May. It marked the eighth month of growth in the past nine months. The divergence reflects the difference in survey samples: the official PMI covers mostly upstream sectors while Caixin focuses on smaller, export-oriented firms. Experts attribute the expansion to an uptick in imports and stockpiling by U.S. buyers ahead of steep tariffs. These include a 10% global baseline tariff imposed since April 2, a 20% “fentanyl” tariff from March 4 and a 25% Section 301 tariff in place since Trump’s first term.

To offset the expected drop in U.S. exports, more Chinese companies plan to expand shipments to ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and regions such as Latin America.

Chinese base oil demand has been sluggish due to trade conflict, economic uncertainties and seasonal patterns. Despite weaker demand, China continues to rely on imports because of a chronic shortage of heavy-viscosity grades. Bright stock has drawn particular interest, with prices rising amid tight supply, although downstream lubricant activity has capped demand.

Domestic sellers have lowered prices to compete with imports and Group II grades, which are more abundant, partly dampening interest in additional Group I cargoes from Southeast Asia, which were already limited.

In India, many requirements were being met through domestic production, with local refiners offering competitive pricing. Import prices were stable to firm due to limited supply from the Middle East. Heavy viscosity grades edged up about $5 per metric ton week on week CFR India, though buying was dampened by the monsoon season and disruptions to transportation, industrial and agricultural activity.

Buyers anticipated fresh offers for foreign product at competitive levels in the coming weeks, though some preferred regional cargoes that did not involve long lead times. Heavy grades and bright stock continued to see interest due to tight supply and the need to replenish inventories. Supplies from the Middle East were expected to improve as producers completed turnarounds, a ceasefire between Israel and Iran held and stock levels were replenished.

Group II

South Korean and Taiwanese producers have been able to offer more Group II product into the region and beyond, putting downward pressure on prices, although limited light-grade supply helped keep some values stable to firm.

In recent weeks, supply tightness driven by turnarounds and reduced output, especially of 150N, had pushed prices higher. Several suppliers withdrew spot offers temporarily to prioritize term contracts. This week, a few offers emerged from South Korea, although at least two producers remained sold out of 150N. Flexitank offers for South Korean-origin 150N were heard in the $795/t-$835/t CFR Southeast Asia range. The 500N grade was offered around $990/t-$1,035 /t CFR SEA. Larger lots of 150N were discussed at $700/t-$730/t FOB Asia and 500N at $950 to $970 per ton FOB Asia.

In China, domestic Group II capacity has grown over the past decade. Amid weaker demand, this has created a slightly oversupplied market and limited interest in imports. Two large producers recently restarted operations after first-half turnarounds, adding to local inventory.

In India, Group II negotiations were quieter than for Group I. Buyers appeared to have requirements covered by domestic production and term contracts. Appetite for additional cargoes was limited, with expectations of increased supply from northeast Asia as plants resumed production. The 500N grade was more available and therefore more exposed to downward price pressure.

Group III

Group III supply has started to loosen, easing upward pressure on pricing. The 4 cSt grade was seen as adequate in most markets, with additional shipments expected to arrive during a soft demand period in higher-priced regions such as Europe and the United States. Turnarounds in Asia have ended, and regional producers are back online, lengthening supply.

In China, Group III prices have come under pressure due to aggressive South Korean offers aimed at gaining market share. However, local producers are fighting to maintain customers. Automotive demand for Group III continues to decline as internal combustion engine vehicle sales fall. While some segments still require Group III or synthetic base oils, many applications can use Group II grades, which are available at lower prices.

In India, Group III spot supply was seen as sufficient to meet demand. Some suppliers attempted price increases on a few tight grades but faced resistance from buyers unable to pass on higher costs in lubricant sales. Lubricant demand has dipped due to economic uncertainty and seasonal rains, which have slowed automotive and motorcycle sales and servicing.

Shipping

• Around 18,000 metric tons of base oils are expected to be shipped from South Korea to India in mid-August.
• A 1,350-ton cargo is under discussion for shipment from Onsan to Bangkok, Thailand, in early August.
• A 1,000-ton lot may be shipped from Onsan to Huizhou, China, between August 18 and 22.
• Two cargoes are being discussed for loading in Yeosu and delivery to Hai Phong, Vietnam, also in mid-August.

Production

The global base oil supply and demand balance is likely to ease as a number of turnarounds will be completed and plants are expected to be restarted, although ongoing shutdowns at a few units, together with permanent closures over the last few years may continue to crimp supplies in some base oil segments.

Group I

• Thai Lube Base Oil’s Group I unit in Sriracha, Thailand, is shut for 45 days from mid-July to mid/late August.
• IRPC’s Group I plant in Thailand, offline for maintenance in May, has resumed operations with limited spot availability.
• In Japan, Group I supply remains tight after extended shutdowns at Idemitsu’s Chiba unit and Cosmo Oil’s Yokkaichi unit.
• Eneos completed maintenance at its Kainan (May–June) and Mizushima B (Feb–May) plants. Mizushima A is scheduled for maintenance in October.
• Two Eneos Group I plants were permanently closed in recent years.
• HPCL in India restarted its Group I unit in late April/early May following a partial shutdown.
• CPCL had a one-week maintenance at its Chennai Group I plant in April.
• PetroChina’s Dalian refinery began a permanent shutdown in 2023. The base oils unit closed in late 2024, with full closure expected by July 2025. Inventory clearance is scheduled by end of August.
• CNPC’s Fushun plant in Liaoning is expected to increase Group I production to offset the Dalian closure. Bright stock capacity estimated at 60,000 t/y.
• Sinopec completed a two-month turnaround at its Gaoqiao Group I and II plant in May.
• Pertamina’s Group I plant in Cilacap, Indonesia, underwent maintenance from mid-January to late February/early March.

Group II

• GS Caltex completed a 45-day turnaround at its Group II/III unit in Yeosu (late February to May), with limited spot supply.
• Hyundai Oilbank Shell Base Oil cut run rates at its Daesan plant from March due to feedstock limitations; increased rates in late May.
• An unplanned outage at CNOOC’s Group II unit in Huizhou affected China’s Q2 availability.
• Sinopec’s Gaoqiao plant turnaround ended in May; its Jinan Group II unit was shut for a month in April.
• BPCL completed maintenance at its Group II plant in Mumbai in March.
• HPCL reportedly conducted a 45-day turnaround at its Group II trains in May (unconfirmed).
• Luberef shut down its Group I and II units in Yanbu, Saudi Arabia, for two weeks in Q2 for maintenance and catalyst change.
• Chevron restarted its Group II plant in Pascagoula, Mississippi, after a four-week turnaround in late May.
• Motiva restarted operations in June after a three-week turnaround at its Port Arthur hydrocracker beginning in late May.

Group III

• SK Enmove completed a partial turnaround at its Ulsan Group III plant in late June; production on other trains continued.
• Adnoc shut its Group II/III plant in Ruwais, UAE, for two-three weeks in early May; operations have resumed.
• Bapco reportedly began a two-month turnaround and catalyst change at its Group III plant in Sitra, Bahrain, in May (not confirmed).

Prices

Crude

Crude oil futures showed little fluctuation on Monday as market players assessed the impact of new European sanctions on Russian oil exports, while concerns about U.S. tariffs possibly weakening fuel demand lingered, particularly as OPEC+ producers plan to raise output.

• Brent September 2025 futures traded at $69.35 per barrel July 21, down from $71.06/bbl July 14 (ICE Futures Europe).
• Dubai front-month crude futures (Platts) August 2025 settled at $68.47/bbl July 18, down from $69.45/bbl July 11 (CME).

Base Oils

Some prices were stable-to-firm, supported by tight conditions, while lengthening supplies of other grades exerted downward pressure on indications.

Price ranges portrayed below reflect discussions, bids and offers, as well as deals and published prices widely regarded as benchmarks for the region.

• Ex-tank Singapore
  Group I solvent neutral 150 steady at $810/t-$850/t and SN500 held at $1,070/t-$1,110/t
  Group II 150N held at $850/t-$890/t but 500N slipped $10 to $1,090/t-$1,130/t
  Bright stock firm at $1,380/t-$1,420/t
  
• FOB Asia
  Group I SN150 unchanged at $680/t-$720/t and SN500 firm at $920/t-$960/t
  Group II 150N hovered around $690/t-$730/t but 500N slipped $10 to $930/t-$970/t
  Group III 4 cSt slipped $10 to $1,110/t-$1,150/t, 6 cSt assessed at $1,100/t-$1,140/t and 8 cSt unchanged at $970/t-$1,010/t