The only base oil category that saw a consistent implementation of increases was API Group I, as all suppliers communicated price hikes between Feb. 1-7 and these received support from tight conditions, particularly for heavy grades and bright stock. There were also initiatives in Group II and Group II+, but not all producers sought increases because supply and demand in these categories were balanced to long.

ExxonMobil, HollyFrontier Sinclair, Calumet, Paulsboro and Safety-Kleen all announced 15 cents per gallon to 25 cents/gal increases on posted prices. For the time being, the rest of the Group II, Group II+ and Group III suppliers sat this round of increases out and continued to monitor market conditions. Sources said that supply in these segments was not as snug as Group I and there was less support for an increase. There were also reports that suppliers may have opted for recalling temporary value allowances granted in the fourth quarter instead of adjusting posted prices.

Market participants were also keeping an eye on the U.S. president’s tariffs. While he first called for tariffs on Mexican and Canadian goods last week, implementation was then delayed until March. Tariffs on Chinese imports met a different fate – a 10% import tax on products from China was still scheduled to take effect on Feb. 4. In a tit-for-tat move, China announced retaliatory tariffs on a number of U.S. exports, with 15% duties to be implemented on coal and liquefied natural gas products as well as a 10% tariff on crude oil, agricultural machinery and large-engine cars imported from the U.S., effective Feb. 10.

Aside from the effects that tariffs on energy imports to the U.S. would have on crude oil prices, U.S. lubricant manufacturers were also concerned about a likely price increase in raw materials and packaging imported from China, which they said would be difficult to transfer down the supply chain due to ongoing competition among suppliers to protect or gain market share in a slack business environment. Trump also imposed a 25% tariff on all steel and aluminum imports, which could have an effect on the price of parts and machinery used in lubricant manufacturing.

The Group II supply and demand ratio may tighten over the next few weeks as a couple of producers were preparing for planned turnarounds, and demand was expected to improve as the spring production season gets underway. At this juncture, however, the light-viscosity grades in the Group II segment remained tight, while the mid-viscosity cut was more readily available.

Chevron was expected to commence a three-week turnaround at its Pascagoula, Mississippi, Group II plant in March, but was anticipated to have started building inventories to cover contractual obligations during the outage. However, there may be less availability of spot supplies, sources speculated. The producer does not disclose details about its plant operations.

Calumet will also complete a two-week maintenance program at its Group I and Group II units in Shreveport, Louisiana, in the second half of February. The producer has assured customers that it plans to have ample inventory to cover orders during maintenance.

Group III prices have been trending up, despite having been under downward pressure for most of the second half of 2024 due to oversupply conditions. Availability has tightened in the U.S., particularly for the 6 cSt and 8 cSt grades, as domestic producers have trimmed Group III output and importers had also adjusted down their import volumes given lackluster demand previously. Upcoming plant turnarounds in the Middle East and Asia might impact spot availability from those regions, offering further support to pricing.

In terms of U.S. base oil exports, activity has been dampened by difficulties in competing with local prices at destination as the U.S. dollar had strengthened versus local currencies amid limited spot availability of some grades, which also hampered business. Export price ideas have been exposed to downward pressure given the sluggish fundamentals. Suppliers were exploring opportunities to Europe and Africa, with a 10,000-metric-ton parcel heard to have been quoted for shipment from the U.S. Gulf to West Africa in the second half of Februarys.

There were signs that buying interest from Brazil had started to improve as existing inventories have been used up and buyers were eager to replenish them. However, availability of domestic products at competitive prices made it difficult to conclude export business, particularly as the local producer has lowered February pricing.

Base oil demand in Brazil may be partly affected by a fire at one of the largest lubricant manufacturing facilities in that country. According to various media reports, a fire broke out at the Moove lubricant plant on Ilha do Governador, in the northern part of Rio de Janeiro, on Feb. 8.

At the time of the accident, the factory was not in operation and there were no victims reported. Local firefighters were able to extinguish the blaze after 28 hours, but the cause of the fire and extent of the damage were still being assessed. It was not immediately clear how long lubricant production might be shut down.

Moove – the second largest lubricant manufacturer in Brazil, according to 2024 statistics – was created in 2008, after Cosan Lubrificantes e Especialidades S/A acquired ExxonMobil’s fuel and lubricant refining and distribution operations in Brazil. Cosan owns 70% of the company in partnership with the North American investment fund CVC Capital Partners, which holds the remaining stake. On Monday, Cosan reported that the logistics infrastructure, storage tanks and warehouses had not been affected by the fire and that the company had put into effect a contingency plan to mitigate possible impacts on Moove customers. The company produces and distributes lubricants and greases for the automotive, agricultural, aviation, marine and industrial segments, including Mobil brand products.

Meanwhile, in Mexico, buyers have been monitoring the U.S. tariff debacle that might affect trading in the coming months. While it was still too early to ascertain the exact effect tariffs would have on base oil shipments, some participants worried that new duties would be applied on base oils moving south of the border at a time when the country was vastly dependent on U.S. imports. The potential levies may also impact automotive shipments from Mexican plants to the U.S. Some buyers were considering offers for material that would be shipped before prospective tariffs go into effect in March. At the same time, economic uncertainties were impacting lubricant demand in Mexico and making it difficult for blenders to estimate product needs over the next few months. Many were therefore holding off on fresh orders.

On the naphthenics base oils side, prices were generally stable to slightly lower, as slipping crude oil and feedstock prices were placing downward pressure on values. Availability of most pale oils was deemed balanced against requirements, but the light-viscosity grades have lost some vigor due to softer demand from the construction segment on seasonal factors and financial uncertainties for some consumers. Suppliers also mentioned emerging competition with paraffinic grades in some applications.

San Joaquin Refining started a scheduled annual maintenance program at its naphthenic base oil plant in Bakersfield, California, on Jan. 31. The program will last up to three weeks. The producer was expected to continue meeting contractual obligations during the shutdown as it had built inventories for that purpose.

Prices

Crude oil futures fell on Wednesday on industry reports showing an increase in U.S. crude stockpiles. Concerns about U.S. tariffs also weighed on sentiment, reverting three days of gains driven by increasing Middle East tensions and intensifying sanctions. The price drop snapped a three-day upward price streak, with Brent climbing 3.6% and WTI rising 3.7%.

On Feb. 11, WTI March 2025 futures settled on the Nymex at $73.32/bbl, compared with $72.70/bbl on Feb. 4.

Brent futures for April 2025 delivery were trading on the ICE at $76.42/bbl on Feb. 11, from $75.80/bbl on Feb. 4.

Louisiana Light Sweet crude wholesale spot prices were hovering at $75.98/bbl on February 10, from $76.92/bbl on Feb. 3, according to the U.S. Energy Information Administration.

Low-sulfur diesel wholesale spot prices were at $2.51/gal at New York Harbor, $2.39/gal on the Gulf Coast and $2.49/gal in Los Angeles on Feb. 10, compared to $2.46/gal, $2.38/gal and $2.50/gal, respectively, on Feb. 3, according to the EIA.

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

Posted Paraffinic Base Oil Prices: February 12, 2025 (Prices are FOB basis, in USD/gallon and USD/metric ton).
Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.
Archived base oil price reports can be found through this link here.
Historic and current base oil pricing data are available for purchase in Excel format.