Officials in Beijing and Washington D.C. said they had reached an agreement to lower their respective tariffs for 90 days while trade negotiations continued. Per the agreement, the U.S. would reduce the tariff on Chinese imports to 30% from the current 145%, while China would cut its import duty on American goods to 10% from 125%, effective May 14.

News of the agreement catapulted crude oil futures to higher ground on Monday as analysts  hoped a potential resolution of the U.S.-China trade war would lead to increased industrial activity and energy demand, although the deal was not considered enough to dissipate uncertainties about the economy.

Crude oil futures had been hovering at multi-year lows in the previous weeks, prompting base oil producers to consider price revisions.

Posted price adjustments – Group II

On the paraffinic side, Chevron stepped out with a 35 cents per gallon posted price decrease on its API Group II base oils, effective May 13, “to reflect market conditions,” according to a company communication.

The adjustment was thought to be driven by lower crude oil and feedstock prices, along with prospects of improved supply given that the company was heard to have restarted its plant in Pascagoula, Mississippi, following a turnaround and catalyst change that had begun in April. Other producers will be restarting their plants following turnarounds as well. Demand was also expected to slow down once requirements to cover lubricant production for the summer driving season have been fulfilled.

According to market sources, Chevron was likely to see a 10% yield increase with the new catalyst. Chevron’s Richmond plant was also running well after its turnaround last October. Chevron was understood to be rebuilding stocks following the Pascagoula shutdown and will not be offering spot volumes until the end of the month. There was no producer confirmation about the turnaround details since the company does not disclose information about its plant operations.

Ergon shut down its Group I/Group II base oil unit in Newell, West Virginia, for about seven weeks on March 31 as the producer is implementing several reliability improvements. The unit was expected to be restarted last week, and no supply interruptions were expected for current ratable customers as the company had built inventories ahead of the shutdown.

Motiva will be performing maintenance on the hydrocracker that produces the Group II 220N grade this month. The three-week program was pushed back by a couple of weeks because the catalyst delivery was delayed, according to market sources.

Excel Paralubes was also heard to be building 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 producer has been running the plant at reduced rates due to technical issues related to Group III production at the facility, according to market sources, but contractual obligations continued to be met. However, sources indicated that the producer was abstaining from offering spot volumes this month, and might not be able to supply spot cargoes in June, depending on whether it can build enough stocks in preparation for its shutdown and the hurricane season.

Given recent and ongoing plant shutdowns, availability of most Group II grades had tightened in the U.S. over the last few weeks. The light grade 100N was described as balanced-to-tight, while the mid-viscosity 220N grade showed some length. Rerefined 100N was also snug on brief rerefinery shutdowns this month and the next, and this offered further support to spot prices. The 600N appeared to be well-balanced against demand, with no shortages to cause concern, according to sources.

Group I

While supplies of Group II grades were expected to grow, spot availability of a number of other base oils remained strained, exerting upward pressure on prices. In the Group I segment, the heavy grades and bright stock were much sought-after, not only in the domestic market, but also for export transactions as global supplies were tight on permanent plant closures and ongoing maintenance programs in most regions. This has driven export values for U.S. products because available cargoes were scarce.

Buying activity for Group I and Group II grades was fairly steady in the U.S. “Demand has been slightly better than expected, which is a pleasant surprise,” a supplier commented. However, some sellers noticed a drop in requirements from the industrial segment, mainly for metalworking fluids, thought to be related to U.S. tariff announcements and reduced industrial output.

Tight Group I fundamentals were perceived in Europe and Asia following permanent plant closures in recent years and current turnarounds at a number of plants. There were discussions to move U.S. base stocks to Europe, and while there was also buying interest for Group I products from the Middle East and Latin America, prices into Europe were deemed more attractive.

Buying appetite from Brazil for U.S. Group I and Group II base oils was lackluster because blenders have enough inventories to keep daily operations running and are able to secure domestic products, which are being offered at lower prices than in the previous weeks. Brazilian lubricant manufacturer Moove, whose plant was damaged by a fire back in February and has not yet restarted operations, was heard to continue sourcing lubricants from Europe, the U.S. and neighboring countries to supply existing customers and protect its market share.

At the same time, there appeared to be an uptick in demand from the West Coast of South America, but Asian exports were said to be more competitively priced than U.S. products and buyers were considering their options.

Mexican demand for U.S. grades used in automotive applications has declined because of output disruptions at car plants, but requirements from other segments seemed to be less impacted by tariffs and were described as fairly healthy and at normal levels. However, a tighter supply situation in the U.S. and climbing spot prices for some grades had discouraged some deals, sources said. Buyers preferred to postpone purchases in hopes that prices may decline in the coming weeks.

Group III

Spot prices for Group III base oils were generally assessed as steady and posted price were also stable. Prices were propped up by decreased Group III production at U.S. facilities as Group II output has been ramped up at units that can produce both, and there had been fewer volumes imported in the previous months.

Demand from the automotive industry for factory-fill oils has suffered because of tariff-related disruptions in supply chains and at several auto plants. Importers said they had seen some effects of the reduced demand, but they expected improved conditions once the tariff situation is clarified and automotive manufacturers shift more production to the U.S. – although this may take some time.

There had been concerns about tariffs on imported base oils, but they have been partly assuaged by reports that South Korean imports would not be subject to tariffs as base oils fall into the energy commodities category, which are exempt. Similarly, Canadian base oils can enter the U.S. without tariffs as long as the products are USMCA compliant, market sources said. Tariff regulations pertaining Middle East imports have not been finalized, but for now, there were expectations that energy products from all countries would be exempt. U.S. president Donald Trump embarked on a Middle East tour this week and there were expectations of some progress made towards trade deals as a result of the visit.

The restart of production at Petro-Canada’s Group III plant in Mississauga, Canada, earlier this month following a turnaround that began in April should allow for additional product to come into the market. The company had built contingency inventory to avoid any supply impacts to customers. The Group II unit at the same location continued to operate during the Group III turnaround.

In South Korea, SK Enmove will be completing a partial turnaround at its Group III plant in Ulsan for two months, starting this month, 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 Spain, an unprecedented blackout in the Iberian Peninsula triggered an unplanned shutdown at Repsol’s Group I plant in Puertollano on April 28. Operations were also disrupted at its larger Cartagena complex, according to Reuters reports, which produces Group II and Group III grades and is operated through a joint venture with South Korea’s SK Enmove. While Repsol declared force majeure on some of its base oils, it appears that the force majeure did not apply to SK’s Group III supplies. (See our story for more)

In the Middle East, Adnoc started a two-to-three-week turnaround at its Group II/Group III plant in Ruwais, Abu Dhabi, United Arab Emirates, earlier this month.

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.

Downstream, lubricant and finished products manufacturers have been resisting additive increases because they worried that they would not be able to recoup the hikes as there is continuing competition among suppliers and it is difficult to raise lubricant prices. Margins have been squeezed for some time as well.

Naphthenic base oils

Earlier this week, Calumet announced that the company would be decreasing all of its naphthenic base oil grades by 20 cents per gallon, effective May 16.

San Joaquin Refining announced that “due to changing market conditions,” the company would be decreasing prices on most naphthenic and aromatic oils by 20 cents/gal, with an effective date of May 15. The producer also said that transformer oils would not change price.

These announcements follow similar ones made by Ergon and Process Oils last week. Sources indicated that consumer pressure and reduced West Texas Intermediate crude oil prices since early April had led producers to revise prices down. While demand for the light pale oils was described as quite healthy, particularly for the transformer oils, the heavier grades have not been faring as well because of a tariff-related slowdown in automotive production in North America since the heavy naphthenic grades are used in rubber and tire applications. These industries typically draw more of the heavy grades ahead of the summer driving season, but this year demand has been lagging.

Naphthenic producers have also been actively shipping product to Europe, Latin America and Asia to some extent, but there has been keen competition with European suppliers in some of these markets.

Crude Oil and Diesel

Crude oil futures jumped on Monday on news about the temporary and partial tariff reprieve between the U.S. and China, as a potential trade war resolution would lead to improved economic conditions and higher energy demand. However, futures fell on Wednesday because traders expected a jump in U.S. crude stockpiles while they awaited official weekly data to be released later in the day.

On May 13, West Texas Intermediate June 2025 futures settled on the Nymex at $63.67 per barrel, compared to $59.09/bbl on May 6. For reference, on April 1, WTI futures had settled at $71.20/bbl.

Brent futures for July 2025 delivery were trading on the ICE at $65.89/bbl on May 13, from $62.42/bbl on May 6. They were down from $74.42/bbl on April 1.

Louisiana Light Sweet crude wholesale spot prices were hovering at $65.52/bbl on May 12, compared to $60.56/bbl on May 5 and $74.37/bbl on March 31, according to the U.S. Energy Information Administration.

Low sulfur diesel wholesale spot prices were at $2.11 per gallon at New York Harbor, $2.05/gal on the Gulf Coast and $2.16/gal in Los Angeles on May 12, compared to $1.98/gal, $1.93/gal and $1.95/gal, respectively, on May 5, according to the EIA.

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

Posted Paraffinic Base Oil Price: May 14, 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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