Weekly Americas Base Oil Price Report

The Saudi Aramco Base Oil Company, Luberef, produces API Group I base oils in Jeddah and Group I/II in Yanbu and has continued shipments to regional and global markets from these ports, but these movements may see disruptions. Luberef base oil shipments have partly mitigated base oil supply shortages in the Middle East, Asia and other regions, but the widespread tight global conditions may be exacerbated if Group I and Group II base oil cargoes cannot be loaded in Saudi Arabia, or only a limited number of vessels are able to reach these ports. Luberef has also planned a turnaround at its Yanbu plant in August, but it was not clear whether the shutdown would take place as planned.

The Group III global supply situation has already reached a critical point, with no fresh shipments able to leave base oil facilities on the Persian Gulf since March. In the U.S., the distributor of ADNOC, the base oil producer in Abu Dhabi, was compelled to declare force majeure on contract commitments due to the shipping and production disruptions. The supplier had been able to supply minimum volumes under contract from existing stocks until June/early July, but those stocks have now been depleted.

Another key transportation channel that may be experiencing disruptions is the Panama Canal. The Panama Canal Authority will restrict 5% of Its vessel booking system and reduce daily transits to 34 vessels per day due to water levels at Gatun Lake, which could lead to longer waits and congestion. This could potentially affect base oil shipments making their way into the U.S. and South America.

West Texas Intermediate futures jumped from around $70 per barrel following the signing of a ceasefire agreement on June 17 to above $90/bbl, with Brent futures climbing to $92/bbl from $76/bbl a month ago. Domestic crude stocks at Cushing were also nearing tank bottoms and there was concern that refiners would have to prioritize fuels production as global diesel supplies have plummeted, particularly given that Russian diesel barrels have been largely absent from the trading scene due to international sanctions and Ukrainian attacks on Russian refineries.

Availability in the Group I and Group II segments was also strained in the U.S. despite the fact that domestic refinery operations had not been as impacted as those in Asia by the Middle East oil supply crisis. However, U.S. producers continued to implement strict sales controls and allocations and offered very little in terms of spot volumes, keeping spot export prices at elevated levels. Group II availability was also expected to remain tight as consumers utilize these grades to replace Group III cuts whenever formulations allow.

Group I and Group II

Group I and Group II supplies remained tight in the Americas, despite the perception that the market was better supplied than in the previous two months. There had been expectations that additional volumes would be moving from Asia to quench the thirst for base oils in traditional U.S. export markets such as Latin America, but steep freight rates and complicated logistics and transportation were thwarting some of the proposed transactions.

A majority of U.S. producers maintained allocations and strict sales controls and had very limited spot supply to offer. Some participants were also trying to build stocks to cover potential supply disruptions caused by severe weather in the U.S., with heavy floods already wreaking havoc in large parts of Texas, although they have not disrupted base oil production at any facilities located in that state. While the national weather forecast had called for a busy hurricane season last year, this year forecasters with NOAA’s National Weather Service were predicting a below-normal hurricane season for the Atlantic basin. Nevertheless, most hurricanes in the past have occurred in August and September and participants did not want to let their guard down.

Most Group I cuts were described as snug in the U.S., with extra bright stock largely unavailable. The Group II light grades have also tightened because some blenders were using these cuts in lieu of Group III cuts in some applications as Group III cuts were so scant.

Recent and upcoming scheduled turnarounds and lower yields due to changes in refined crude slates have exacerbated the Group II/Group III supply situation in the U.S. Chevron’s Pascagoula, Mississippi, Group II/Group III plant reportedly started a turnaround in early June which was completed at the end of June, and this may have impacted spot supply at that time. A Group I refiner is planning to take its plant off-line for maintenance for five weeks in September and was building inventories to cover contractual obligations during the outage. A Group II producer has also scheduled a turnaround in the third quarter that may be tightening supplies even further.

Climbing crude oil and feedstock prices were anticipated to exert upward pressure on base oil values. While crude prices had weakened during the brief ceasefire in late June, they have started to climb again given the renewed hostilities in the Middle East and the possibility that crude supply disruptions may last for several more weeks.

Even though many refiners in the U.S. have been insulated from the crude supply crunch because they can run plants on domestic crude slates, a few producers were still affected because they need heavier slates from the Middle East. They have been forced to acquire crude oil from other sources, with a number of U.S. Gulf refiners heard to have encountered some challenges in terms of yields as they have had to adapt operations to the new crude slates. Some Group II producers that can also produce Group III base oils have maximized Group III output given the urgent need for additional barrels and the attractive netbacks.

Rising production costs, including base oils, additives, packaging, transportation and other expenses, had prompted blenders to implement a number of lubricant and finished product price increases since the start of the Iran war. But the implementation of these increases has been challenging, particularly for smaller blenders, and many have been unable to recoup the higher costs, which has led to reduced operating rates in some cases. Some blenders were also aware that potential demand destruction could occur if their prices went too high. But any decline in base oil demand will likely be offset by the lack of extra availability, with most suppliers focusing on meeting contractual commitments and offering very little product beyond their earmarked volumes.

Meanwhile, some requirements for U.S. cargoes for export into Mexico also went unfulfilled, either because there was no extra U.S. availability, or because buyers were resisting the higher prices. Export prices have climbed in line with international indications. Some buyers have postponed orders hoping that availability levels would improve, but the ongoing Middle East conflict might continue to disrupt global energy and impact base oil trading and pricing.

Likewise, inquiries for Group I and Group II cuts from Brazil might not be met because of the tight conditions in the U.S. The Group I cuts in particular had been scarce in Brazil following a production outage at Brazilian producer Petrobras’ plant earlier this year, coupled with a planned turnaround that started in mid-June. The turnaround has been completed and additional volumes were expected to reach local consumers, and this has placed downward pressure on domestic Group I prices.

There have been reports of traders looking to ship base oils from India and other origins in Asia to Latin America, but logistics were complicated and freight rates have jumped, making prices less competitive than originally expected.

A number of arbitrage opportunities into Europe have gone unfulfilled because of a lack of U.S. spot supplies, but buying interest from that region has declined because of summer holidays when some blenders take the opportunity to reduce operating rates given fewer employees, or idle plants for maintenance.

Group III

With base oil shipments unable to be shipped out of ports in the Persian Gulf, almost a fifth of the world’s Group III supplies have been taken out of the market. Close to half of the Group III requirements in the U.S. are met through shipments from three producers: Shell Qatar Pearl GTL, ADNOC and BAPCO.

While Abu-Dhabi producer ADNOC had been expected to ramp up base oil operating rates at its plant in Ruwais in preparation for a resumption of export shipments following the June ceasefire, these plans appeared to have been scrapped as vessels were largely unable to load at Persian Gulf ports. According to reports, ADNOC had been producing base oils at reduced rates following an Iranian attack on the Ruwais industrial complex on March 10 and was solely supplying its own downstream operations.

The U.S. distributor of ADNOC’s base oils, Penthol, was compelled to declare force majeure on contract commitments for an indeterminate period because the company is unable to ship product out of the UAE. In a letter sent to customers on July 15, Penthol said the disruptions in the Middle East had resulted in the suspension of AD base oil supply from ADNOC, and this had affected its ability to meet contractual obligations, adding that transportation issues, unplanned outages, equipment failures, power disruptions, government actions, war-related events and reduced or unavailable supply had caused the FM declaration. Penthol also said that the company was monitoring developments and communications from ADNOC and evaluating alternative supply arrangements and logistics to restore deliveries as soon as possible.

Another key facility in the Middle East was not expected to resume full output for some time. The Shell Qatar Pearl gas-to-liquids (GTL) plant in Qatar was anticipated to keep at least one train off-line for an extended period after damages sustained during Iranian drone attacks in March, with repairs likely to take several months to complete. The supplier was heard to be seeking additional base oil barrels from other producers to meet some of its contractual obligations in the U.S. and Mexico.

There was still no official update about the status of BAPCO’s Group III base oil plant in Bahrain, which had also been damaged during drone strikes and a fire on March 5. Sources indicated that base oil supply from BAPCO continued under force majeure.

Meanwhile, Asian producers were striving to meet as many inquiries for spot business as possible, but supplies were fairly strained and the suppliers were focusing on meeting contractual obligations, with strict sales controls and allocations in place.

Last week, SK Enmove communicated a posted price increase for its Group II+ and Group III base oils of 50 cents per gallon, which went into effect on July 15. A majority of Group III price indications from the few suppliers who were able to supply some spot Group III barrels continued on a steep climb.

A domestic Group III refiner was understood to be running its plant at reduced rates, which could exacerbate the current supply shortages. Most suppliers were largely unable to meet the extra spot requirements that continued to pour in. Rerefined products have also helped satisfy some of the demand that has been left unfulfilled by virgin base oil producers, with rerefiners reporting sold-out positions.

Naphthenic Base Oils

Naphthenic prices were steady, but producers monitored Brent crude oil prices closely as these have fluctuated over the last two weeks, impacting refinery economics. When crude and feedstock prices had dipped, some customers had seen price decreases given their contracts are indexed against crude and diesel prices, but base oils were once again exposed to upward pressure.

In terms of supply and demand, most suppliers described the situation as balanced-to-tight, because availability of light naphthenic base oils was more limited, with a producer heard to be sold out of pale 40, 60 and 100 grades due to robust demand from the transformer oil segment. Consumption of pale oils had also seen an uptick because blenders were using these cuts to replace paraffinic oils given current supply constraints and high prices. The heavy-viscosity pale oils were heard to be slightly more available.

Lubricant Increases

Independent lubricant manufacturers were facing competition from major manufacturers, who have started to reduce finished lubricant prices. Smaller blenders were largely unable to offset the sky-high base oil costs if they decreased lubricant prices, and may have to reduce output if price pressure from steep raw material prices does not let up soon.

A majority of lubricant manufacturers have implemented price increases since the start of the Iran war to offset rising production costs over the last four months. Some suppliers have been successful at achieving the full intended amounts given concerns of potential shortages due to recent and ongoing supply disruptions. Some manufacturers have faced resistance, particularly as buyers were dealing with cash flow constraints and credit limitations against a backdrop of demand uncertainties in downstream markets.

Lubricant manufacturers have announced three round of increases, with effective dates peppered between April and the end of May. The markups have been driven by the mounting costs of base oils, additives, packaging and transportation over the last two months. Participants underscored that given current uncertainties and the fast pace of market changes—not to mention the escalating production costs–it remained very challenging to plan inventories and make pricing decisions.

Among the manufacturers that have announced various lubricant, grease and finished products increases were TotalEnergies USA, Highline Warren, Martin Lubricants, Omni Specialty Packaging, AOCUSA/Amalie, Calumet, CAM2, Castrol, Shell/SOPUS, PennStar, Chevron, ExxonMobil, Citgo, Phillips 66, Reliance Fluid Technologies, Consolidated Brands/ZXP Technologies and Valvoline. During the first two rounds of increases, suppliers had announced lubricant and grease increases of up to 9% to 35%, depending on the product, with some lubricant increases ranging 48 cents per gallon to $5/gal, and $0.07-0.11/lb for greases. The third round called for increases of up to 26% for most products from one supplier, and markups of $3.00/gal-$3.70/gal for synthetic oils, $2.40/gal-$2.60/gal for other oils, and $0.25/lb-$0.29/lb for greases from the rest of the suppliers.

Some manufacturers have already been forced to reduce output given difficulties in transfering the higher production costs down the supply chain, coupled with base oil shortages, particularly of Group III cuts. Several OEM dealers were understood to be bracing for difficulties in fulfilling genuine motor oil demand given the current conditions. Dealers and distributors of a number of major automotive manufacturers received notifications of temporary motor oil supply shortages “due to production and logistics constraints within the global petrochemical supply chain,” one letter read. Even if the Strait of Hormuz were reopened tomorrow, the repercussions of the current supply disruptions were expected to be felt until next year. Some small blenders were considering closing their doors because of financial difficulties and credit limitations to purchase raw materials to keep operations running.

Crude Oil

Crude oil futures climbed to five-week highs on escalating tensions between the U.S. and Iran and threats by Houthi rebels of vessel attacks and a blockade of the Bab el-Mandeb Strait in retaliation for the U.S.’ blockade of Iranian ports.

• West Texas Intermediate September 2026 futures settled on the Nymex at $84.34 per barrel on July 21, up from $79.34 per barrel on July 14 and $70.44/bbl for front-month futures on July 7.
• Brent August 2026 futures were trading on the ICE at $92.32/bbl on July 22, up from 85.76/bbl on July 15 and $76.04/bbl for front-month futures on July 8.
• Louisiana Light Sweet crude wholesale spot prices were hovering at $86.88/bbl on July 20. Spot prices had settled at $79.10/bbl on July 13 and $69.10/bbl on July 6, according to the U.S. Energy Information Administration.

Diesel

Low-sulfur diesel wholesale, July 20 (July 13), EIA
New York Harbor: $4.12 per gallon ($3.87/gal)
Gulf Coast: $4.04/gal ($3.78/gal)
Los Angeles: $4.28/gal ($4.02/gal)

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

Posted Paraffinic Base Oil Prices July 22, 2026

(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.

*ExxonMobil prices obtained indirectly.
**Rerefiner