The sense of uncertainty underlying various economic sectors has dampened demand for base oils and lubricants, with buyers preferring to secure smaller volumes. “I think most blenders are cautious not knowing if the economy is weak and demand will slow further in the coming months,” a source explained. But some manufacturers have seen a pickup in demand from specific downstream segments and have returned to the market to order more base oils.

Automakers have been hit with 25% tariffs on cars and certain auto parts, and some OEMs were reported to have halted production temporarily to rearrange supply chains and shift more production to the U.S. According to a White House Fact Sheet, U.S.-Mexico-Canada-Agreement compliant automobile parts will remain tariff-free until the Secretary of Commerce, in consultation with U.S. Customs and Border Protection, establishes a process to apply tariffs to their non-U.S. content. In the short term, market observers expected car prices to move up and sales to fall, ultimately leading to reduced factory-fill lubricant demand.

There were also reports of increases announced for additives slated for May implementation.

Some blenders were already facing steeper production costs as some of their components and inputs are imported from China, and these will be subject to a 145% tariff. Lubricant manufacturers were unsure whether they would be able to recoup the higher overhead as ongoing competition has forced many to lower prices to maintain their customer base.

Despite the uncertainties, base oil producers were standing firm by their prices as they hoped that demand would strengthen and supplies tighten ahead of the summer driving season. Recent and ongoing turnarounds were likely to exacerbate the snug conditions, particularly in the API Group I segment. Bright stock continued to be the star of the show in this segment and availability has tightened globally given plant rationalizations in recent years and a heavy turnaround schedule, particularly in Asia.

Tightening base oil supplies on the back of steady demand and plant turnarounds had driven spot prices up for a brief time, but softer conditions in the domestic market have started to exert downward pressure on spot indications of some Group II cuts, namely the mid-viscosity grades as surplus volumes were growing. However, a supplier was expected to use more product for its own downstream operations and this would likely tighten supplies of the heavy grades.

Ergon shut down its Group I/Group II base oil unit for approximately seven weeks as the producer implements several reliability improvements. The company said that no supply interruptions were expected for current ratable customers.

Chevron started a three-to-four-week turnaround at its Pascagoula, Mississippi, Group II plant this month and had been anticipated to build 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.

Excel Paralubes was also heard to be 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 due to technical issues related to Group III production at the facility, according to market sources.

According to sources, Group I/Group II producer Calumet was rebuilding stocks following a turnaround in March.

In the Group III segment, supplies have been slightly impacted by reduced output at domestic plants and maintenance at several units in the Americas, Asia and the Middle East, leading to strained availability. Prices have been relatively stable, but there is a wide range of pricing, with some imports being offered at significantly lower levels as they lack certain approvals.

In Canada, Petro-Canada has embarked on a thirty-five-day turnaround at its Group III plant in Mississauga this month. 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.

There were also reports that S-Oil has cut back production in Onsan, South Korea, given reduced demand for base oils on a global scale, but this could not be confirmed.

In the Middle East, ADNOC was expected to shut down its Group II/Group III plant in Ruwais, Abu Dhabi, United Arab Emirates, for two to three weeks in late April.

Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, which was originally scheduled to start in late March or early April, but was reportedly postponed.

There have been questions regarding tariffs and how these might impact Group III base oil imports. The U.S. is quite dependent on Group III imports because North American production is not sufficient to cover growing demand, so substantial amounts of Group III grades are moved every month. South Korean imports were heard to be excluded from tariffs as they fall under the energy commodities category that is exempt.

Given that there was limited surplus of most base oil grades in the U.S., export prices remained steady against buying interest from Europe, Africa, and Central and South America.

Several shipping inquiries to move products this month and the next surfaced this week, with a 1,350-metric ton cargo discussed for shipment from Houston, Texas, to Rio Haina, Dominican Republic. A 3,000-ton lot was mentioned for possible shipment from Paulsboro, New Jersey, to Amsterdam-Rotterdam-Antwerp (ARA) between May 1-10. A second cargo of 5,000 tons originating in New Jersey was also discussed for shipment to Hamriyah or Jebel Ali, United Arab Emirates, between May 10-20.

Brazilian appetite for U.S. base oils has been less robust than in the second half of last year given increased domestic production and a weaker local currency against the U.S. dollar. But these conditions have shifted given a weakening of the dollar against other currencies. Buyers were also hoping that lower crude oil prices would translate into reduced offers for U.S. base oils in the coming weeks. Domestic supplies were able to fill a majority of requirements and there was also some surplus base oil in the market because lubricant manufacturer Moove has not restarted operations following a fire at its plant near Rio de Janeiro in February.

There has also been an increase in shipments to Brazil from neighboring Argentina, helping meet product needs, with about 7,000 metric tons expected to be shipped from La Plata to Rio Grande, Brazil, between May 1-20, and other cargoes being worked on. A 3,000-ton lubes cargo was also discussed for shipment from La Plata to Rio de Janeiro between May 10-20.

Business on the naphthenic base oils side has seen similar conditions to those mentioned by paraffinic market participants. Demand was characterized as “sluggish,” especially for the heavier pale oils. These grades typically see an uptick in the spring/summer as consumption from the rubber and tire industries strengthens due to increased driving rates. However, the increase in demand may be smaller this year given the general bearish market sentiment.

Domestic participants said they had not observed a direct impact from tariffs, but customers in other countries may have a different view, particularly if reciprocal tariffs get implemented and U.S. products are subject to higher levies, increasing their cost.

Naphthenic base oil prices for domestic transactions were mostly steady despite crude oil price fluctuations, although some accounts linked to a diesel index may see price changes. Producers felt optimistic that conditions would improve in the summer, lending support to pricing. Spot export prices have edged up in some cases, depending on the grade and the destination, due to keen buying interest from Europe and Asia, but competition with overseas suppliers was placing pressure on prices as well.

Crude Oil and Diesel

Crude oil futures started the week with a sharp drop on negative comments by Trump about the U.S. Federal Reserve and investors’ concerns of a potential global economic slowdown that would curb oil demand.

Oil prices strengthened on Tuesday following new U.S. sanctions against an Iranian oil magnate. A rise in equity markets sparked by hopes of easing trade tensions between the U.S. and China also triggered a recovery rally from the prior session’s steep selloff.

On April 22, West Texas Intermediate June 2025 futures settled on the Nymex at $63.67 per barrel, compared to $61.33/bbl on April 15. Futures were hovering at $71.20/bbl on April 1.

Brent futures for June 2025 delivery were trading on the ICE at $67.84/bbl on April 22, from $64.36/bbl on April 15. They were sharply down from $74.42/bbl on April 1.

Louisiana Light Sweet crude wholesale spot prices were hovering at $65.68/bbl on April 21, compared to $64.22/bbl on April 14 and $74.37/bbl on March 31, according to the U.S. Energy Information Administration.

Low-sulfur diesel wholesale spot prices were at $2.12 per gallon at New York Harbor, $2.03/gal on the Gulf Coast and $2.20/gal in Los Angeles on April 21, compared to $2.10/gal, $2.02/gal and $2.22/gal, respectively, on April 14, according to the EIA.

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

Posted Paraffinic Base Oil Prices: April 23, 2025 (Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).
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*ExxonMobil prices obtained indirectly.
**Rerefiner