Weekly Asia Base Oil Price Report

About 6 million barrels of crude per day that pass through Bab el-Mandeb Strait to Asia are now at risk, experts said. Two vessels carrying oil from Saudi Arabia’s western port of Yanbu were attacked by the Houthi rebels, while two other tankers were forced to turn north after initially sailing towards Bab al-Mandeb, according to the shipping analytics firm Kpler. Asian refiners are now considering diverting tankers on an alternative, but much longer route, sending Saudi oil from Yanbu through Egypt’s Suez Canal and into the Mediterranean before sailing around Africa and the Cape of Good Hope in Africa towards Asia. This would considerably delay shipments and exacerbate the already steep insurance and freight rates that have been affecting the industry.

Brent futures rose above $101 on Friday — up nearly 40 percent since the start of the war — but slipped to near $91/bbl on Monday after the U.S. and Iran halted military strikes for a second day.

Base oil prices continued to bifurcate — with API Group I and Group II spot prices under downward pressure given higher production rates and weakening regional demand as many buyers have retreated from the market, and Group III climbing to new highs on product shortages and uncertainties as to when Middle East Group III producers would be able to restart production and resume shipments. With the Strait of Hormuz mostly closed to vessel traffic, neither crude oil nor refined products such as base oils can leave ports in the Persian Gulf, where several refineries and at least three key base oil facilities are located.

Group I

Group I base oil spot prices remained exposed to downward pressure on rising regional availability and weakening demand, but spot offers were largely suspended this week given ongoing uncertainties on the U.S.-Iran war front and potentially more severe crude supply disruptions following Houthi rebel attacks on Saudi tankers in the Red Sea.

Improved supply levels in Asia over the last few weeks coincided with a weakening in demand because buyers were waiting to secure additional base oils once prices appeared close to bottoming out. Some consumers had no choice but to purchase at current prices because they had maintained lean inventories and were near depletion. Demand also tends to ease in Asia in the second half of the year. Many buyers were not overly concerned as they continued to receive shipments under contract. But spot offers were difficult to locate and trading was muted.

Several refineries in Asia have been able to improve their run rates following crude oil purchases from origins outside of the Middle East after the first shock of the Iran war that caused a severe oil supply crunch, although yields were not optimal for all refiners as most Asian facilities have been built to run on heavier Arab crude slates or similar crudes.

Some countries had also allowed refiners to tap into strategic emergency crude stocks, but these were close to being exhausted in some areas and there were concerns that few fresh crude cargoes from the Middle East would become available if transit through both the Strait of Hormuz and the Bab el-Mandeb Strait were blocked. With fuel shipments having been disrupted as well and governments concerned about fuel shortages, a few refiners were likely to have to focus on fuel production to the detriment of other refined products such as base oils.

There were few active base oil discussions taking place, but base oil buyers appeared to favor flexibag shipments because that would expose them to less risk in terms of pricing, versus acquiring large cargoes whose value may decline later. Small spot offers have emerged from Thailand and other Southeast Asian suppliers, with the latest indications for SN150 hovering near $1,400-1,500 per metric ton CFR Southeast Asia. The Thai producer had also recently offered small cargoes of Group I SN500 at $1,500/ton and bright stock at $1,630/ton FCA Thailand.

Group I and Group II term supplies from a key Southeast Asian producer were expected to improve next month, but remained restricted in July. There was no update forthcoming as to the status of the producer’s operations and whether it expected increased availability.

Chinese producers have offered flexibag cargoes of Group I SN150 at competitive levels, considerably below Southeast Asian indications. China typically has an oversupply of the light grades, but the heavier grades remained tight, limiting the amount of material that suppliers were able to take to the market.

Domestic producers were dealing with growing inventories because buying interest has dwindled given seasonal factors and buyers’ reluctance to acquire too much product that may lose value later on. They delayed purchases for as long as possible, hoping to achieve lower prices and confident that there would be enough base oil available.

Bright stock was telling a slightly different story because it had been in more limited supply than other grades and prices had edged up — not only in China, but in the region in general — and increased availability expected over the next few weeks on rising import volumes has allowed prices to stabilize.

Group I import prices were still not considered competitive compared to domestic supplies, but there has also been an increase in imports from Thailand, possibly easing a tightening of availability when a local producer shuts down for maintenance next month.

In India, buyers have started to show more resistance to the prevailing price levels, and were cautious about purchased volumes. Their main concern was to be able to recover production costs since base oils and other raw materials had climbed. Blenders tended to acquire enough base oils to keep production running and focused on restocking base oil inventories as needed, but preferred to have no overhang. They were also cautious during a period of uncertainty and potential severe weather that might disrupt transportation and industrial activities.

Buyers also seemed to prefer domestic supplies versus imports as prices were deemed competitive and less exposed to transportation and logistical issues. Nevertheless, there were several South Korean parcels and cargoes from other origins heading to India this month.

Group I import prices on a CFR India basis were stable-to-soft as trading was very limited and suppliers held off on making new offers. Bright stock remained under pressure. Bulk cargoes of bright stock of Thai origin were heard offered into India at competitive prices. There was the possibility of obtaining some limited Group I cargoes from the Middle East and Russia as well, sources reported, although Russian products were not abundant due to refinery shutdowns caused by Ukrainian strikes on Russian sites, and Saudi cargoes may not be able to be lifted at Red Sea ports given Houthi attacks on vessels and facilities.

Group II

Group II prices were steady-to-soft due to growing supply levels in Asia against weaker demand, but experienced more moderate downward adjustments than in the previous weeks, or were stable because suppliers had the option of shipping product to other regions where prices were higher, and this offered some support to regional pricing.

Base oil demand has declined as some blenders had been unable to offset rising production costs, and they were running plants at reduced rates or suspended production temporarily until they were able to place most of their lubricant inventories and recoup some of those costs given credit and cash limitations. Others were also hesitant to stock too much product as prices were weakening and they preferred to wait until prices have reached a floor.

Asian refineries have been able to increase production rates, but renewed crude oil shipment disruptions in the Middle East could tighten global crude availability further and place pressure on pricing. Several refiners had been able to secure crude shipments from origins outside the Middle East and hoped to be able to continue receiving these cargoes, although some refineries were not running at optimum rates because of the different crude slates.

National emergency crude oil stocks have reached critically low levels and this could become a significant issue if Persian Gulf crude oil exports do not resume soon. Saudi Arabian base oils might not able to leave ports on the Red Sea either due to Houthi rebel attacks on vessels navigating that body of water, making global supplies even tighter. Some refiners might also need to prioritize fuel production versus that of base oils, while some Group II producers who have the ability to produce Group III were optimizing Group III output due to the global shortages and soaring prices.

At the same time, a key Southeast Asian Group I/Group II producer was expected to lift term supply allocations in August, particularly on Group II cuts, with some buyers hoping to take advantage of the increased availability next month.

A South Korean producer was understood to be eyeing deep-sea destinations for its Group II grades as margins were attractive, although logistics and steep freight rates were making some transactions difficult to conclude. A second producer continued to maintain allocations to ensure fulfillment of contractual obligations.

The sole Taiwanese producer has increased operating rates following an unexpected shutdown in late June due to feedstock supply issues at the affiliated refinery, with the plant having been restarted in early July, according to sources. Although the producer has resumed spot offers of small cargoes mostly, it was also trying to start building inventories to cover contract commitments during a scheduled turnaround in October, sources added. Offers from for South Korean and Taiwanese flexibag volumes were heard in the $1,600s per ton CFR Asia.

In China, some domestic Group II producers have lifted prices because of recent crude oil price spikes. Import volumes have been curtailed due to recent supply disruptions and this has allowed distributors to maintain ex-tank prices. Demand has been sluggish, with a seasonal slowdown encouraging buyers to cover immediate needs and refrain from acquiring too much product. These fundamentals were exerting pressure on import prices, although the price decline for the light grades was more pronounced than that for the heavy grades. A tighter supply and demand ratio for the heavy-viscosity cuts offered support to prices, but buying interest was rather lackluster in any case.

Chinese refiners had been able to continue running plants at full rates because the country had been stocking large amounts of crude oil since last year, and base oil producers were therefore less exposed to the Middle East crude supply disruptions.

Domestic Group II producers had offered Group II spot export cargoes to destinations such as India to reduce growing inventories at home, but regional demand has weakened as buyers preferred to wait for further developments given that most Group II base oil prices were under downward pressure.

In India, Group II import prices were generally stable, but buyers were holding their breath as they monitored the situation in the Middle East. A Houthi blockade of the Bab el-Mandeb Strait could halt base oil shipments from Saudi Arabia, and vessels heading to India would also have to be rerouted around the Cape of Good Hope in South Africa, which would increase voyage times and freight costs.

Indian suppliers were running plants at high rates and buyers were encouraged to rely more heavily on locally-produced material so as to avoid logistical risks. Domestic producers were also expected to maintain prices steady for the time being. Many buyers had built inventories ahead of the heavy rain season and demand was sluggish. However, some blenders were using Group II base oils to replace Group III cuts in some applications, leading to increased buying interest in Group II cuts.

Group III

The prolonged shutdown of the Strait of Hormuz to shipping traffic has severely worsened the global Group III base oil supply crisis. Since the Persian Gulf houses 20% of the world’s Group III refining capacity, alternative global plants cannot produce enough volume to offset these Middle Eastern losses — even when operating at maximum utilization. Furthermore, analysts caution that extended operational halts will create long-term impacts, making it increasingly difficult to restore crude extraction, refining, and export volumes to their pre-conflict benchmarks.

Group III global supply shortages could also be exacerbated by the limited number of ship operators willing to risk passage of the Strait of Hormuz and Bab el-Mandeb, and insurance companies were disinclined to cover these voyages as well. According to media reports, Iran-backed Houthi rebels had sent emails to most shipping companies threatening strikes on vessels that attempted to load at Saudi ports on the Red Sea, with at least two vessels actually having been hit and two vessels having to turn around due to drone threats.

Many buyers have turned to Asian Group III base oils to fill the supply gap left by the absence of Middle East Group III barrels. However, Asian capacity is not sufficient to meet all requirements and consumers were dealing with supply shortages, even though Asian producers have increased production rates after securing crude oil from alternative sources in regions outside of the Middle East.

Meanwhile, in the Persian Gulf, Abu-Dhabi producer ADNOC had been expected to ramp up base oil operating rates at its plant at the Ruwais complex in preparation for a resumption of export shipments, these plans appeared to have been scrapped as vessels were largely unable to load at Persian Gulf ports. The U.S. distributor of ADNOC material, 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. 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.

According to market sources, ADNOC had run its Group II and Group III base oil facilities at reduced rates since the start of the conflict to feed downstream lubricant operations, following an Iranian drone strike in March.

Another key facility, the Shell Qatar Pearl gas-to-liquids (GTL) base oil plant in Ras Laffan, Qatar–the world’s largest GTL base oils facility–was expected to be only able to run one of its two trains after suffering Iranian drone attacks on one of the trains on March 18. The Pearl GTL plant has two production units (trains) of equal size. Given the complex equipment of a GTL unit, the repairs may take up to one year to be completed, market experts said. The Pearl plant receives feedstocks from Qatar Energy in the same industrial complex in Ras Laffan.

There were still uncertainties surrounding BAPCO’s operations and whether the producer had been able to restart Group III production in Bahrain. According to some media reports, BAPCO operations remained suspended. A fire at BAPCO’s refinery in Maameer, Bahrain, on March 5 following an Iranian attack had forced the producer to shut down and declare force majeure on its group ​operations, although the company confirmed that domestic supplies remained fully secured under pre-established contingency plans. An official company report on whether the plant had been restarted was not available.

In China, Chinese Group III prices continued on an upward trend due to global shortages and rising international prices. Blenders also faced resistance to lubricant price increases, which made it challenging for them to offset the higher production and feedstock costs.

A turnaround at a Chinese base oils plant that started in early July and was not expected to be completed until the end of August tightened supplies further.

A Malaysian Group III producer was preparing for a turnaround starting in late August and has restricted spot offers as it was focusing on meeting term commitments.

A couple of Chinese suppliers continued to look for Group III export opportunities, but these were restricted by acceptance of this material due to the approvals and specific formulations that some applications required.

In India, Group III import prices continued to move up given the global supply shortages triggered by the Middle East disruptions. The steep international prices have encouraged a key domestic producer to seek export opportunities, while still supplying local customers and its own downstream operations. A large cargo was reportedly ready to load from India to an unspecified destination in Asia this week.

Indian Oil started to supply Group III base oils from its plant in Haldia in December 2025, and additional Group II and Group III capacity was expected to come online at the Gujarat Indian Oil plant in the third quarter of 2026.

Shipping

Details about recent transactions emerged during the week, with an 8,000-10,000-ton cargo heard shipped from South Korea to the U.S. Gulf in mid-July. A 3,000-ton lot was shipped from Mailiao, Taiwan, to Karachi, Pakistan, in late June on the Sky Winner. About 3,000 tons were shipped from the U.S. Gulf to Karachi in late May on the Stolt Breland.

A few cargoes were discussed for possible shipment this month:

• A 7,000-ton cargo was discussed for loading in Thailand to West Africa between August 20 and 30.
• A 2,000-ton parcel was on the table for shipment from Rayong, Thailand, to Mumbai, India, at the end of July/early August.
• About 4,000 tons were expected to be lifted in Tianjin, China, to Mumbai in the first half of August.
• Approximately 10,000 tons of base oils were mentioned for shipment from West Coast India to West Africa in late July.
• About 12,000 tons of base oils were quoted for shipment from South Korea or India to West Africa in August.
• A 2,250-ton parcel was quoted for shipment from Onsan, South Korea, to Singapore in late July.
• Between 15,000 to 20,000 tons were mentioned for possible shipment from South Korea to West Coast India between August 15 and 20.
• A 6,000-ton lot was being considered for shipment from Yeosu, South Korea, to Vietnam in the first half of August.
• A 3,000-ton cargo was being considered for loading in South Korea to Pakistan around Aug. 10.

Production

Middle East Plants

Qatar Energy halted production of liquid natural gas (LNG) and other products following drone attacks on its facilities in Ras Laffan and Mesaieed in early March. The facility will not be able to return to normal production for several months, and has declared force majeure on LNG shipments, according to the company’s website. One train at the Shell/Qatar Petroleum Pearl gas-to-liquids base oil unit in Ras Laffan, which suffered some damage during an attack as well, was heard to be shut down. The unit utilizes natural gas from the Qatar Energy refinery to produce Group III base oils. The plant has a nameplate capacity of 1.37 million tons of Group II/Group III base oils. The damaged train was expected to remain shut down for several months, possibly a year, until repairs to the highly specialized equipment are completed.

Fire erupted at Bapco’s refinery in Maameer, Bahrain, on March 5 following an Iranian attack. The country’s Ministry of Interior reported that the fire had been brought under control without providing further details about potential damages. Bapco operates a 400,000-tons-per year Group III base oil facility in Sitra, within the Bapco refinery complex. Sources familiar with the plant’s operations said that Group III production was unaffected by the fire, but some reports indicated that production had stopped for damage assessments. An official report was not available by the publishing deadline.

In Abu Dhabi, United Arab Emirates, a suspected drone strike had triggered a fire at the Ruwais Industrial Complex, leading authorities to shut down the country’s flagship refinery as a precautionary measure on March 10. The Ruwais complex houses ADNOC’s Group II and Group III base oils plant. According to sources familiar with ADNOC’s operations, the base oil unit was not damaged during the drone attack as only one train of the refinery had been affected by the strike, although it was reportedly running at reduced rates. The latest information indicates that ADNOC was preparing to ramp up production following news of a ceasefire in the Middle East on June 21, although these plans have been derailed by a resumption in hostilities and renewed closing of the Strait of Hormuz on July 8.

The latest plant turnaround information for 2026 is provided below, along with plant shutdowns that took place in the second half of 2025 as they may have impacted base oil pricing at the time of completion and beyond.

Group I

• CNOOC Taizhou started a turnaround at its Group I/II plant in Jiangsu, China, in mid-April that was expected to have been completed in mid-June.
• Petrochina Fushun started a turnaround in early May that was completed last week at its Group I plant in Fushun, China.
• Idemitsu was expected to start a scheduled turnaround at its Group I plant in Chiba, Japan, in mid-May that will last until July. The company secures Group III base oils required for its high-performance and eco-friendly engine lubricants through a partnership and a memorandum of understanding (MOU) with Saudi Aramco Base Oil Company (Luberef).
• Eneos’ plant in Kainan, Japan, suffered an unplanned shutdown in February 2026. The company’s Mizushima A plant underwent maintenance from October to November 2025.
• Two Eneos Group I plants were permanently closed in Japan in recent years.
• Pertamina reportedly embarked on a one-month turnaround at its Group I plant in Cilacap, Indonesia, in April 2026.
• Luberef postponed a 30-day turnaround at its Group I/Group II plant in Yanbu, Saudi Arabia, from August to October 2026. The company had previously completed maintenance at the unit from mid-November until December 2025. The plant underwent an expansion in 2017. 
• Luberef has secured a new feedstock supply agreement for the company’s Jeddah facility. The facility had been expected to close by mid-2026, but the new supply agreement will allow it to continue operations beyond 2026. As a result, the company will maintain its current production capacity of 275,000 t/y year of Group I base oils. With the completion of the Growth-II Project in Yanbu, Luberef’s total production capacity will reach 1.53 million t/y, making it the only supplier in the region able to offer Group I, Group II and Group III base oils.
• PetroChina’s Dalian refinery began a permanent shutdown in 2023. The base oils unit closed in late 2024, with full closure completed in July 2025. Inventory clearance was scheduled by end of August 2025.
• CNPC’s Fushun plant in Liaoning was expected to increase Group I production to offset the Dalian closure. Bright stock capacity is estimated at 60,000 t/y.

Group II

• Formosa Petrochemical unexpectedly shut down its Group II base oils plant in Mailiao, Taiwan, due to feedstock supply issues given technical problems at the affiliated refinery, in early July, but restarted production the second week of July. Some shipments suffered small delays. Formosa had postponed a scheduled turnaround and catalyst change plant from the fourth quarter of 2025 to third quarter of 2026.
• Hyundai Oilbank Shell Base Oils shut down its plant in Daesan, South Korea, in early April 2026 for approximately 45 days. The plant had run at reduced rates for several days in February due to a technical problem. The turnaround was completed around May 8 and spot shipments were expected to have resumed in June.
• GS Caltex shut down its Group II/Group III plant in Yeosu, South Korea, in early May to complete a month-long turnaround. The plant was expected to have been restarted in June.
• CNOOC has scheduled a turnaround at its Taizhou, China, plant in the second quarter of 2026.
• State-owned Sinopec Jingmen Co. plans to have a turnaround at its plant in Jingmen City, China, in November 2026. It is the largest production plant for base oils and waxes in Central-South China.
• ExxonMobil completed a capacity expansion at its Singapore Resid Upgrade Project and commenced on-spec production in August 2025. The producer has started to offer an ultra-heavy Group II grade with similar characteristics to bright stock. The project is an upgrade of the company’s integrated manufacturing complex, which will allow it to expand large-scale production of its global EHC Group II slate and meet growing demand for high-performance lubricants in the Asia-Pacific region, the company said.
• Indian Oil Corp. was understood to have completed a one-month turnaround at its Group II plant in Haldia in November 2025. The producer also completed an expansion of its Group III capacity in Haldia in December 2025, and was expected to complete a Group II/Group III expansion at Gujarat in the third quarter of 2026.

Group III

• SK-Pertamina (Patra SK) will complete a 40-day turnaround at its plant in Dumai, Indonesia, which started in early May, in mid-June.
• In China, Shanxi Lu’an started a partial turnaround at its plant in Changzhi in late May and was expected to restart around June 22.
• Petronas was heard to have postponed a turnaround at its Group II/III Melaka plant in Malaysia from June to late August 2026, with a restart expected at the end of September.
• Indian Oil Corp. completed an expansion of its Group III capacity in Haldia and a start-up of the expanded plant was achieved in December 2025.
• The restart of Shanxi Lu’an’s base oil plant following an unplanned shutdown in December 2025 was expected to bring more Group III supplies to the market in early 2026.

Prices

Crude Oil
Crude oil futures slipped on Monday as the U.S. and Iran halted their military attacks for a second consecutive day.

• Brent futures were trading at $90.88 per barrel on July 27, slightly down from $90.94/bbl for front-month futures on July 20 (ICE Futures Europe).
• Dubai crude futures (Platts) for August 2026 settled at $84.49/bbl on July 24, up from $80.42/bbl for front-month futures on July 17 (CME).

Base Oils
Spot base oil prices in Asia were mixed this week, with spot trading halting for some grades due to market uncertainties linked to the Middle East conflict, and Group III moving up given persistently tight fundamentals and regional shortages. Prices have been notionally adjusted to reflect current market conditions and sentiment, but trading continued to be limited and transactions remained difficult to track, especially for Group III grades, as there was hardly any spot product to be obtained.

The price assessments 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 was steady at $1,460/t-$1,480/t
SN500 was adjusted down by $10/t to $1,470/t-$1,510/t
Bright stock was holding at $1,680-$1,720/t.

Group II
150N was down by $10/t at $1,740/t-$1,780/t
500N was also lower by $10/t at $1,750/t-$1,790/t

FOB Asia

Group I
SN150 fell by $60/t to $1,300/t-$1,340/t
SN500 was lower by $60/t at $1,300/t-$1,340/t
Bright stock prices dropped by $80/t to $1,400/t-$1,440/t

Group II
150N assessments heard down by $10/t at $1,700/t-$1,740/t
500N held at $1,720/t-$1,760/t

Group III
4 cSt grade rose by $50/t to $3,230/t-$3,280/t
6 cSt moved up by $50/t at $3,220/t-$3,270/t
8 cSt also assessed up by $50/t at $3,070/t-$3,110/t

Gabriela Wheeler can be reached at gabriela@LubesnGreases.com

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