Base oil market participants were still trying to absorb the news and said that it was too early to quantify the impact of the tariffs. Those blenders who import base oils from Canada will likely feel a direct impact on prices from the 10% levy on energy imports, which are expected to include base oils. It was not yet clear whether finished lubricants and greases would also be subject to the lower duty. The Independent Lubricant Manufacturers Association reported that the organization reached out to the Trade Policy and Programs Office of the U.S. Customs and Border Protection for clarification. The new tariffs were expected to not only affect the base oils and lubricant business, but many other closely related segments, such as the automotive industry.

A number of U.S. base oil suppliers acknowledged that their Mexican customers postponed orders until a clearer picture emerges about the tariffs and how they will be implemented. “It’s still too soon to fully understand who it affects,” a source noted.

The same situation applied to U.S. manufacturers who ship products to Canada, who explained that they did not know whether the current tariff schedule for certain products was still valid or not.

Meanwhile, in the API Group I segment, spot indications for solvent neutral 100 have edged up by a couple of cents per gallon on tight supplies and increased demand as the spring lubricant production season has started. Bright stock – still the star of the Group I category – also experienced firming spot prices because availability was not only strained in the U.S., but in other regions as well. This was partly attributed to a structural shortage given permanent Group I capacity closures and ongoing plant turnarounds.

However, with additional Group II heavy-viscosity grade capacity scheduled to come on stream at ExxonMobil’s plant in Singapore in the second half of the year, more material with bright stock characteristics will hit the market. Some participants worried that this segment may become oversupplied, while others said that the market was likely to absorb the additional output.

There was buying interest from Africa for U.S. supplies, with a 5,000-metric ton cargo being discussed for shipment from Houston, Texas, to West Africa in the second half of March.

Brazilian demand for U.S. cargoes has not been as strong as last year, but buying appetite has ticked up given the production issues at Brazilian producer Moove’s lubricant plant following a fire last month. The balance of the suppliers were hoping to fill the supply gap left by the affected producer and were looking to increase inventory levels. There were also some pockets of increased activity for Group III grades. An 8,000-ton cargo was heard to have been shipped from Kerteh, Malaysia, to Rio de Janeiro in the second half of February.

The Group II light grades were also seeing strained conditions in the U.S. and prices have inched up by a couple of cents/gal too. The heavier grades were heard to be more readily available, although the Group II segment may experience tighter spot supply on the back of a number of turnarounds that were scheduled this month. Export business was limited as prices into destinations in India and the Middle East have not been workable, despite keen import interest given reduced supplies in Asia.

Calumet will be shutting down its Group I and Group II units in Shreveport, Louisiana, for two weeks in the second half of March, although the producer originally scheduled the turnaround for the second half of February. The producer has assured customers that it will have built ample inventory to cover contract demand during maintenance.

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

Ergon announced that the company’sparaffinic refinery in Newell, West Virginia, which houses a Group I and Group II base oils unit, has scheduled a planned maintenance event beginning March 31. Various operating units of the refinery will be down for approximately seven weeks as the producer implements several reliability improvements. The company also said that no supply interruptions were expected for Ergon’s current ratable customers, “as product inventory levels are expected to be sufficient to support sales during the planned outage.”

Further down the road, Excel Paralubes was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, in the second half of this year, according to sources, and may start to build inventories ahead of the shutdown.

Group III spot prices have inched up by a few pennies per gallon, as they received support from curbed output in the U.S. and reduced imported volumes since the beginning of the year. Potential tariffs on Canadian imports could have a direct impact on Group III products moving from that country into the U.S. as well. Upcoming plant turnarounds in the Middle East and Asia might further strain global spot availability and offer support to prices as well, with spot values already having moved up in Asia.

In South Korea, SK Enmove will be completing a partial turnaround at its Group III plant in Ulsan for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

In the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in late March or early April.

On the naphthenics base oils front, prices were reported as steady, but upward pressure was building despite lower crude oil prices as supplies have tightened on the back of budding demand and reduced availability following a plant turnaround.

A refinery turnaround at San Joaquin Refining’s naphthenic base oil plant in Bakersfield, California, that started on Jan. 31 was completed on Feb. 28. The producer continued to meet contractual obligations during the shutdown as it had built inventories for that purpose. However, it was unable to offer additional cargoes and was also trying to fulfill a backlog of orders, which seemed to be a sign that the market had tightened. The producer was understood to have a long waiting list for pale oil 60 and 100, and has received requests from non-customers, indicating a domestic shortage on those grades.

There were also expectations that Ergon would be completing a maintenance program at its naphthenic base oils plant in Vicksburg, Mississippi, later this year, following a turnaround at its paraffinic plant in West Virginia, although no further details were available.

Crude and Diesel Prices

Crude oil futures plummeted on Tuesday and settled close to multi-month lows following reports stating that OPEC+ plans to increase output in April. Prices were further depressed by news of U.S. tariffs on Canada, Mexico and China, as well as talk of retaliatory tariffs from the three countries. The tariff war erased stock gains attained since Trump’s election as its consequences reverberated through global markets and fanned investors’ concerns about the economy.

March 3
Louisiana Light Sweet crude wholesale spot, U.S. EIA, $72.53/bbl (Feb 24., $74.06/bbl)
Low-sulfur diesel wholesale spot, U.S. EIA, $2.23/gal, New York Harbor; $2.22/gal Gulf Coast; $2.28/gal Los Angeles (Feb. 24, $2.46, $2.34, $2.50/gal, respectively)

March 4
West Texas Intermediate April 2025 futures, Nymex, $68.26 per barrel (Feb. 25, $68.93/bbl)
Brent futures May 2025 delivery, ICE, $71.04/bbl (April futures Feb. 25, $73.26/bbl)\

*ExxonMobil prices obtained indirectly
**Rerefiner

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

Posted Paraffinic Base Oil Prices: February 26, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton)
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