Trading was somewhat subdued and base oil prices experienced a reprieve as various holidays, including Golden Week, Literary Day, Coronation Day and Labor Day were observed in Asian countries, dampening activity levels. Participants were also hoping that the war in Iran would be resolved and the Strait of Hormuz would be reopened in the coming days as Tehran presented a proposal to end the conflict, but United States president Donald Trump doubted the terms presented by Iran would be acceptable. Markets were on edge as Middle East crude oil was still largely unable to be shipped out because few tankers were able to traverse the strait, and crude prices continued to hover at lofty levels. Some Asian refiners have started to receive oil cargoes from other origins and production rates were anticipated to improve.
The U.S. blockade of Iranian ports has stranded about 1.8 million barrels a day of Iranian crude oil, forcing the country to use decommissioned tankers for storage and depriving many nations of a key source of feedstocks, media sources reported. Some countries, including India and China, have increased their purchases of Russian oil and others were resorting to securing oil from more distant origins such as the U.S., Australia and Africa.
Crude oil futures slipped on Sunday after president Trump announced that the US would “guide” stranded vessels out of the Strait of Hormuz, disclosing few details on how the operation, known as “Project Freedom,” would work. However, prices jumped on Monday on reports that a U.S. vessel had been hit by a Iranian missile. Meanwhile, the Opec+ announced an increase in oil output of 188,000 barrels per day from June following its first meeting since the loss of a key member, the United Arab Emirates.
Base oil prices showed little change from last week due to the absence of spot offers, the local holidays and buyers’ difficulties in absorbing the significantly steeper production costs. Lubricant and finished product manufacturers have tried to pass the higher base oil, additive and transportation costs down the supply chain, but buyers have resisted these efforts and competition among suppliers also thwarted the implementation of increases. Some blenders have no choice but to scale back production and reduce base oil purchases, as they are unable to accept the significantly higher base oil offers.
Group I and Group II
The number of spot offers was very limited as most base oil producers were focusing on meeting term obligations and had no additional volumes for spot business. This situation affected both Group I and Group II producers, given that many Asian refiners depend on Middle East crude oil to run their refineries. Oil shipments from the Middle East have been curtailed due to the U.S.-Israel-Iran conflict and Iran’s chokehold on the Strait of Hormuz.
Group I and Group II supplies were deemed extremely tight in Asia due to a combination of factors. Some Middle East base oils that are typically shipped to Asia have become unavailable due to reduced operating rates at Middle East refineries and the closure of the strait, although some volumes continued to be shipped ex-Saudi Arabia via the Red Sea. At the same time, Asian refiners were unable to obtain all the Middle East crude oil needed to run their refineries at full rates. While some refiners have imported oil from other origins including the Americas and Africa, most refineries in Asia are built to run on Middle East crude, and yields were therefore expected to decline.
However, there was some glimmer of hope as Thai refiners were anticipated to be able to receive Middle East crude supplies following an agreement between the Thai and Iranian governments that allowed Thai vessels to traverse the strait. A Thai oil tanker safely passed through the Strait of Hormuz in late March and a second tanker, the Athina, also navigated the area in mid-April, according to an article published in The Diplomat. It was heard that a Thai producer had offered small quantities of Group I base oils on the spot market a couple of weeks ago, but it was not clear whether the supplier had found a buyer.
Indonesian producers were also expected to continue running plants at fairly high rates as their dependence on Middle East crude was more limited, with only approximately 20%-25% of Indonesian crude oil imports coming from the Middle East versus other Asian refiners who are highly dependent, as almost 60% of their oil imports are sourced in the Middle East.
Several Asian refiners have made efforts to diversify procurements to ensure that their customers’ supply needs are covered. Japanese refiners, for example, have secured oil cargoes from the U.S. and from a Russian region that is not subject to international sanctions, and South Korean refiners have been able to utilize strategic emergency oil supplies to run their refineries, while also seeking imports from various sources outside the Middle East.
A key South Korean refinery was anticipated to increase run rates this month, while a second producer, Hyundai Oilbank-Shell, which had shut down operations to perform maintenance work in early April, was anticipated to restart production in mid-May. The key Group II supplier exports significant amounts to countries such as China and India and had already restricted spot offers before the start of the conflict as it was preparing inventories ahead of its turnaround.
Prospects of improved Group I and Group II availability led buyers and sellers to maintain prices from last week, and to adjust down bright stock bids and offers, resulting in reduced spot prices this week. Buying interest for bright stock had been dampened by the steep prices, with buyers trying to use up existing stocks instead of chasing fresh cargoes. Group II spot prices were also maintained as trading was subdued and buyers were largely unable to accept the current offer prices.
In Taiwan, the sole Group II producer, Formosa Petrochemical, was understood to be focusing on term commitments and domestic product needs, and its base oil plant was expected to run at improved rates this month following a few weeks of reduced output due to a 40-day turnaround at an upstream crude distillation unit.
A key Southeast Asian Group I and Group II producer was understood to have informed customers that the company was significantly reducing term supplies in May after some reductions in the previous two months.
Chinese domestic producers have maintained competitive Group I and Group II base oil prices in hopes of increasing market share compared to imports, which have been difficult to secure. Demand from most lubricant segments has been lackluster due to general market uncertainties and manufacturers faced challenges when trying to increase finished product prices to offset the higher production costs. Trading was subdued in China during the week due to the Labor Day holidays on May 1-5.
State-run refiners such as Sinopec and PetroChina were allowed to use strategic emergency crude supplies and commercial reserves to manage shortages caused by the tensions in the Middle East, while smaller, independent “teapot” refineries have been able to purchase Russian crude oil to run plants as well. Since March, China has instructed its top refiners to halt or severely restrict exports of diesel, gasoline and other refined products.
In India, Group I import prices were largely stable this week on indications that imports may become more available over the next few weeks. Buyers were also resisting higher values because they were unable to absorb the steeper base oil prices and pass them on to their downstream customers.
Prices for the Group II cuts were heard to have moved up by $20 per metric ton on a CFR India basis over the week, as inventories are being drawn down and any replenishment cargoes that are procured now can only be obtained at higher prices. Domestic producers were raising prices as well as their refining costs have surged, and base oil output has been curbed to prioritize fuel production, but gasoil values have softened after hitting record highs last month, cutting refining margins. Blenders, on their part, were hoping to recoup the higher raw material costs by implementing lubricant increases, but encountered resistance to the steeper prices.
Group III
Global availability of Group III grades still showing extremely tight fundamentals due to the lack of Middle East shipments, since cargoes remained trapped after Iran’s closure of the Strait of Hormuz and at least two base oil refineries have shut down production after suffering Iranian drone and missile attacks.
The Shell/Qatar Petroleum Pearl GTL plant, the Adnoc unit in Abu Dhabi and Bapco facilities in Bahrain have all been hit by drones. While parts of these facilities were spared and continued to run, the Shell/Qatar Petroleum Pearl GTL plant was expected to remain shut for several months, possibly until year-end, because of damages to the equipment and a feedstock supply outage at the upstream Qatar Energy refinery. Bapco was also heard to have shut down base oil production, although this could not be confirmed with the producer directly. Even if refineries and oil wells are still functional, the fact that products cannot be shipped out of the Persian Gulf due to the closure of the strait has forced producers to shut down production as storage was running out.
A large share of global Group III volumes is also produced in Asia, but several Asian producers have cut run rates due to a shortage of Middle East crude oil. Some countries have been able to import crude oil from other origins, or resorted to using strategic emergency reserves, but some refiners were prioritizing fuel production and have reduced base oil output.
A key South Korean supplier was heard to be able to produce enough base oils to meet contract commitments as it has diversified its crude sources in the last few years, with the refinery ostensibly able to handle alternative crudes much better than other refineries. The supplier is therefore able to meet customer demand, both on the domestic front, as well as for export, mainly to the U.S., but it has also been managing inventories closely.
A second South Korean producer was heard to be highly dependent on Middle East crude imports and was therefore only focusing on meeting term obligations, placing customers on strict allocations.
The Malaysian refiner Petronas was heard to have been able to continue running its facilities at high rates because it can refine domestic crude oil, but it has reportedly restricted base oil volumes to term customers and has limited its participation in the spot market. In a press release posted on its website, Petronas confirmed that fuel supply had been secured through the end of June 2026.
In China, Group III prices still hovered at steep levels due to a global scarcity of these grades and the outage at two key Middle East plants, which were likely to affect shipments for several months, even if the war in Iran ends soon. Domestic suppliers have increased offer levels, driven by the tight supply conditions and higher feedstock costs. Some consumers are able to run blending plants on existing stocks, but these were likely to be depleted over the next few weeks, while other blenders have resorted to trimming production as base oils prices were difficult to offset.
In India, Group III import prices continued to move up, but the increases were more moderate than in the previous weeks, with increases heard near $50/t on a CFR India basis. Indian base oil buyers appeared reluctant to accept steeper values as they continued to face challenges when trying to recuperate the higher production costs because they have only been able to implement partial increases for lubricants and other finished products.
Some imported cargoes were heard to have been re-exported from India as prices in other regions were significantly higher and netbacks were more attractive. A number of base oil cargoes were heard to be moving from India to Singapore and China this month as well.
Shipping
- Approximately 8,000-9,000 metric tons of base oils were discussed for shipment from West Coast India to Singapore between May 10-20.
A 3,000-ton cargo was quoted for shipment from Mumbai, India, to Singapore between April 25 and May 5.
A 3,000-ton lot was expected to be shipped from West Coast India to North China in late April.
About 2,700 tons were discussed for shipment from Onsan, South Korea, to Zhangjiagang, China, in late May. - A 1,900-ton cargo was mentioned for shipment from Onsan, to Jingjiang, China, in late May.
- A 1,500-ton parcel was expected to be shipped from Mailiao, Taiwan, to Port Klang, Malaysia, in mid-May.
- About 1,500-7,000 tons were mentioned for prompt shipment from Yanbu or Jeddah, Saudi Arabia, to Singapore.
- A 9,700-ton cargo was also mentioned for shipment from Saudi Arabia to Singapore in the first half of May.
- A 1,700-ton lot was on the table for loading in Onsan to Singapore in the first half of May.
Production
Qatar Energy halted production of liquid natural gas (LNG) and other products following drone attacks on its facilities in Ras Laffan and Mesaieed on March 3. The facility will not be able to return to normal production for a long time, likely years, and has declared force majeure on LNG shipments, according to the company’s website. The Shell/Qatar Petroleum Pearl gas-to-liquids base oil unit in Ras Laffan, which suffered some damage during an attack as well, was heard to be shut down. The unit utilizes natural gas from the Qatar Energy refinery to produce Group III base oils. The plant has a nameplate capacity of 1,372,000 metric tons of Group II/Group III base oils and its shutdown caused global availability of Group III base oils to tighten significantly. The plant was expected to remain shut down for several months.
Fire erupted at Bapco’s refinery in Maameer, Bahrain, on March 5 following an Iranian attack. The country’s Ministry of Interior reported that the fire had been brought under control without providing further details about potential damages. Bapco operates a 400,000-metric tons per year Group III base oil facility in Sitra, within the Bapco refinery complex. Sources familiar with the plant’s operations said that Group III production was unaffected by the fire, but some reports indicated that production had stopped for damage assessments and it was unclear when shipments would resume, given the closure of the Strait of Hormuz. An official report was not available by the publishing deadline.
In the United Arab Emirates, a suspected drone strike triggered a fire at the Ruwais Industrial Complex, leading authorities to shut down the country’s flagship refinery as a precautionary measure. The Ruwais complex houses Adnoc’s Group II and Group III base oils plant. According to sources familiar with Adnoc’s operations, the base oil unit was not damaged during the drone attack as only one train of the refinery had been affected by the strike, although it was reportedly running at reduced rates.
The latest plant turnaround information for 2026 is provided below, along with turnarounds that took place in the second half of 2025 as they may have impacted base oil pricing at the time of completion and beyond.
- Group I
Pertamina was expected to embark on a one-month turnaround at its Group I plant in Cilacap, Indonesia, in April, but it could not be confirmed whether the shutdown will proceed as planned. - Eneos’ plant in Kainan, Japan, suffered an unplanned shutdown in February 2026. The company’s Mizushima A plant underwent maintenance from October to November 2025.
- Two Eneos Group I plants were permanently closed in recent years.
- Luberef scheduled a 30-day turnaround at its Group I/Group II plant in Yanbu, Saudi Arabia, in August 2026. The company had previously completed maintenance at the unit from mid-November until December 2025. The plant underwent an expansion in 2017.
- Luberef has secured a new feedstock supply agreement for the company’s Jeddah facility. The facility had been expected to close by mid-2026, but the new supply agreement will allow it to continue operations beyond 2026. As a result, the company will maintain its current production capacity of 275,000 t/y of Group I base oils. With the completion of the Growth-II Project in Yanbu, Luberef’s total production capacity will reach 1.53 million t/y, making it the only supplier in the region able to offer Group I, Group II, and Group III base oils.
- PetroChina’s Dalian refinery began a permanent shutdown in 2023. The base oils unit closed in late 2024, with full closure completed in July 2025. Inventory clearance was scheduled by end of August 2025.
- CNPC’s Fushun plant in Liaoning was expected to increase Group I production to offset the Dalian closure. Bright stock capacity is estimated at 60,000 t/y.
Group II
Hyundai Oilbank Shell Base Oils shut down its plant in Daesan, South Korea, in early April 2026 for approximately 45 days. The plant had run at reduced rates for several days in February due to a technical problem. The turnaround was expected to be completed in mid-May.
GS Caltex had a partial shutdown at its Group II plant in Yeosu, South Korea, in mid-March.
CNOOC has scheduled a turnaround at its Taizhou, China, plant in the second quarter of 2026.
State-owned Sinopec Jingmen Co. plans to have a turnaround at its plant in Jingmen City, China, in November 2026. It is the largest production plant for base oils and waxes in Central-South China.
Formosa Petrochemical postponed a scheduled turnaround and catalyst change at its Mailiao, Taiwan, plant from the fourth quarter of 2025 to third quarter of 2026.
ExxonMobil completed a capacity expansion at its Singapore Resid Upgrade Project and commenced on-spec production in August 2025. The producer has started to offer an ultra-heavy Group II grade with similar characteristics to bright stock. The project is an upgrade of the company’s integrated manufacturing complex, which will allow it to expand large-scale production of its global EHC Group II slate and meet growing demand for high-performance lubricants in the Asia-Pacific region, the company said.
Indian Oil Corp. was understood to have completed a one-month turnaround at its Group II plant in Haldia in November 2025. The producer also completed an expansion of its Group III capacity in Haldia in December 2025.
Group III
Petronas has postponed a turnaround at its Group II/III Melaka plant in Malaysia from June to August 2026.
SK-Pertamina will be completing a 40-day turnaround at its plant in Dumai, Indonesia, in May 2026.
A fire at SK-Pertamina’s refinery broke out on October 1, 2025, but was quickly extinguished, with no impact to base oil supply reported. The Dumai Group III base oil plant was shut down for maintenance after the fire and was restarted shortly after. Term supplies were not expected to have been affected. Pertamina also operates a Group I plant in Cilacap, Indonesia. The Dumai refinery is a joint venture between Indonesian state-run Kilang Pertamina Internasional and South Korean producer SK Enmove.
Indian Oil Corp. completed an expansion of its Group III capacity in Haldia and a start-up of the expanded plant was achieved in December 2025.
The restart of Shanxi Lu’an’s base oil plant following an unplanned shutdown in December 2025 should bring more Group III supplies to the market in early 2026.
Prices
Crude Oil
Crude oil futures jumped by 5% on Monday after reports that a U.S. warship had been hit by an Iranian missile in the Strait of Hormuz, although the U.S. denied the report.
Brent July 2026 futures were trading at $111.67 per barrel on May 4, up from $106.31/bbl for front-month futures on April 27 (ICE Futures Europe).
Dubai crude futures (Platts) for June 2026 settled at $97.59/bbl on May 1, down from $98.19/bbl for front-month futures on April 24 (CME).
Base Oils
Spot base oil prices in Asia were somewhat mixed this week, with most assessments holding at unchanged levels from last week on subdued activity, and bright stock being adjusted down as recent levels were deemed unworkable and both bids and offers have slipped. Prices have been notionally adjusted to reflect current market conditions and sentiment, but trading was muted as producers have generally withdrawn spot offers and transactions remained difficult to track.
The price ranges portrayed below reflect discussions, bids and offers, as well as deals and published prices widely regarded as benchmarks for the region.
Ex-tank Singapore
Group I
Solvent neutral 150 was unchanged at $1,860/t-$1,900/t
SN500 was hovering at $1,860/t-$1,900/t
Bright stock prices were assessed lower by $100/t at $1,900-$1,940/t
Group II 150N was hovering at $1,930/t-$1,970/t
500N was assessed unchanged at $1,920/t-$1,970/t
FOB Asia
Group I
SN150 was steady at $1,700/t-$1,740/t
SN500 was unchanged week-on-week at $1,700/t-$1,740/t
Bright stock prices were assessed lower by $80 at $1,890/t-$1,930/t
Group II
150N assessments were holding at $1,830/t-$1,870/t
500N was also unchanged at $1,820/t-$1,860/t
Group III
The 4 cSt grade was hovering at $2,200/t-$2,240/t
6 cSt was steady at $2,180/t-$2,220/t
8 cSt was unchanged from a week ago at $2,040/t-$2,080/t
Gabriela Wheeler can be reached at gabriela@LubesnGreases.com
Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.