However, the upward trend was short-lived, with crude oil prices plummeting on fears that an escalating trade war between the U.S. and other countries would spark a global recession and dampen energy demand. Lower crude oil prices were welcome news to refiners if tariffs on crude oil imports from Canada and Mexico – two of the main crude suppliers to the U.S. – go into effect. Currently, all imports from these two trading partners are subject to 25% tariffs, but energy resources from Canada are slated for 10% levies announced back in February.

On April 2, Trump issued an Executive Order calling for a blanket 10% tariff on goods imported into the U.S. from all countries, effective April 5, and varying duties or “reciprocal measures” of up to 50% on imports from specific trading partners with trade deficits with the U.S., effective April 9. Certain goods, such as copper, pharmaceuticals, semiconductors and some energy products were exempt from these high reciprocal tariffs.​ Trump had also imposed a 25% levy on passenger vehicles, light trucks and automobile parts imported from all countries back in March, with some exemptions for Mexican and Canadian goods.

Governments around the world rushed to schedule phone calls and meetings with the Trump administration, hoping to discuss proposals that involved lowering their import duties to avoid the tariffs, with Japan and South Korea already sending negotiators to Washington this week.

Trump’s 25% levies on imported vehicles that took effect last week are prompting companies to stop shipping cars to the U.S., as well as shut down factories in Canada and Mexico and lay off American workers, The New York Times reported. Reduced automotive production was likely to lead to lower demand for factory-fill lubricants and Group III base oils, sources noted.

U.S. manufacturers who purchase components and raw materials from China were facing soaring costs as Trump announced steep tariffs totaling 104% on Chinese imports, effective April 9, as China did not withdraw the retaliatory tariffs it has imposed on U.S. products.

Amid all this turmoil, it was not clear what products would be subject to tariffs, and which ones would be exempt – for example, there was concern about tariffs on additives as these would directly impact finished lubricant prices. Market participants said that more time was required to ascertain the scope and effect of the new regulations.

Meanwhile, base oil demand in general seemed to have softened given the current market uncertainties. In terms of API Group I production, with the exception of Calumet’s and Ergon’s planned  turnarounds in March/April, most U.S. plants were heard to be running at optimal rates and have scheduled maintenance later in the year.

A heavy Group I turnaround schedule in Asia and Europe in the first two quarters, together with permanent plant closures, have led to a structural shortage of Group I grades and fueled interest in U.S. availabilities, placing upward pressure on export offers. However, in some cases, the spot supplies available in the U.S. were not deemed sufficient to meet export inquiries.

There appeared to be particular interest in the Group I SN500 cut because this grade was being used in a few heavy-duty applications, since bright stock was extremely tight in most regions. Bright stock has also been sought by many traders as spot volumes of this grade were less readily available and prices have edged up. Demand in the U.S. has declined somewhat as consumption from the industrial segment has turned sluggish.

Buying interest from Mexico was ongoing, with some buyers still eager to build inventories ahead of the tariff implementation. However, economic uncertainties were also dampening lubricant consumption in the neighboring country.

Brazil has shown less appetite for U.S. barrels so far this year than last year, with domestic supplies having increased and prices deemed more competitive than U.S. offers. There were still some volumes available for spot business that had been originally earmarked for Moove, the Brazilian lubricant producer whose plant has reduced production due to a fire in February.

Group II base oil supply has partly been affected by a string of plant turnarounds that were expected to curb spot availability in the U.S. and other regions as well. While the producers have built ample inventories to cover contract commitments during the outages, spot supplies will likely be more limited.

Calumet has just completed a two-week planned shutdown at its Group I and Group II units in Shreveport, Louisiana, with production resuming at the end of March.

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. Market sources said that the company seemed well-prepared on inventory, and that Chevron’s Richmond plant was also running well after its turnaround last October. There was no producer confirmation about the turnaround since the company does not disclose details about its plant operations.

Ergon announced that its paraffinic refinery in Newell, West Virginia, which houses a Group I and Group II base oils unit, would be starting a scheduled maintenance event on 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.

Excel Paralubes was preparing inventories as it was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, in the second half of the year. The plant has been running at reduced rates, according to market sources.

Group III spot supplies were balanced-to-long due to a slowdown in demand, but upcoming plant turnarounds are likely to impact spot availability. Domestic producers have curbed Group III output in favor of Group II production in recent weeks, and import volumes have also been slightly down. It was not yet clear whether Group III imports from South Korea, Qatar, the United Arab Emirates, and Indonesia would be subject to tariffs, although sources said that certain energy products were exempt from tariffs. It remained to be seen whether this applied to base oils from all origins. As it stands, Canadian Group III base oil imports would be subject to 10% duties as base stocks were understood to fall within the “energy resources” category.

Several Group III plants are scheduled for turnarounds over the next couple of months, both in the Americas, as well as in Asia and the Middle East, leading to strained supplies. In Canada, Petro-Canada plans to embark on a 35-day turnaround at its Group III plant in Mississauga in April. The producer said the shutdown was fully planned for, with contingency inventory built and no impact expected to customers. The Group II unit at the same location will continue to operate.

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, but confirmation of the shutdown was not available by the publishing deadline.

On the naphthenics base oils front, a balanced-to-tight supply and demand scenario offered support to steady pricing, although participants were monitoring crude oil prices closely, as they have a direct impact on naphthenic refinery operations. Some contractual business may be concluded at lower prices given that a number of contracts are indexed against diesel.

Crude Oil and Diesel

Crude oil futures plunged to their lowest levels since 2021 on the back of an escalating trade war between the U.S. and other countries, particularly China, as analysts feared that this could trigger a global recession and a sharp reduction in oil consumption. The price drop was expected to pressure the OPEC+ to consider a reversal of their recent production hike.

On April 8, West Texas Intermediate May 2025 futures settled on the Nymex at $59.58 per barrel, compared to $71.20/bbl on April 1.

Brent futures for June 2025 delivery were trading on the ICE at $60.19/bbl on April 8, from $74.42/bbl for front-month futures on April 1.

Louisiana Light Sweet crude wholesale spot prices were hovering at $63.40/bbl on April 7, from $74.37/bbl on March 31, according to the U.S. Energy Information Administration.

Low-sulfur diesel wholesale spot prices were at $2.08 per gallon at New York Harbor, $2.03/gal on the Gulf Coast and $2.19/gal in Los Angeles on April 7, compared to $2.31/gal, $2.26/gal and $2.39/gal, respectively, on March 31, according to the EIA.

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

Posted Paraffinic Base Oil Prices: April 9, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.
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*ExxonMobil prices obtained indirectly.
**Rerefiner