Weekly Asia Base Oil Price Report

Saudi Aramco CEO Amin Nasser said on Sunday that the world has lost about 1 billion barrels of oil over the past two months due to the war, and expected energy markets to take time to stabilize even if oil flows resume. His statement mirrored the sentiment of base oil industry participants, who felt the market disruptions would have long-lasting consequences and base oil supply levels would not recover for several months, particularly as a number of key base oil plants in the Middle East have been damaged and refiners have declared force majeure on production, or have been unable to ship out cargoes.

Meanwhile, 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 as they are unable to offset the higher prices, with some blenders having to scale back production and reduce base oil purchases. A lack of Group III base oils was also affecting the production of premium lubricants for PCMO, luxury cars lubricants and other specialty applications, according to media reports.

Group I

For the first time since the beginning of the Iran conflict, the Group I and Group II price trend appeared to diverge from Group III grades as Group I and Group II cuts have come under pressure due to prospects of improved supplies against slightly reduced demand because many buyers had built stocks when crude prices started to surge and have now assumed a wait-and-see attitude. Improved availability of flexibag volumes placed downward pressure on Singapore ex-tank prices in particular.

While several Asian base oil producers have suffered production setbacks due to a shortage of Middle East feedstocks following the closure of the Strait of Hormuz and the shuttering of oil wells in the Persian Gulf, some have started to receive shipments from alternative sources, or have been able to tap into national strategic emergency oil reserves. India and China have also resorted to purchasing more oil from Russia, as U.S. sanctions on crude from this origin have been temporarily suspended.

Some Group I producers have had the additional advantage that their plants have been able to run on domestic crude oil supplies, or their governments have reached agreements with Iran whereby a minuscule number of tankers have been allowed to traverse the strait.

This was the case of Thai refiners, who 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 cross the Strait of Hormuz. At least two Thai oil tankers were understood to have safely sailed through the crucial passageway in late March and in mid-April. Additionally, in early March, Thailand’s deputy energy secretary said that between Thailand’s oil reseves, the oil barrels that have already passed through the strait and additional volumes from other sources, the country would have sufficient oil to meet domestic demand for 61 days.

It was also heard that Thai Lubes had offered small quantities of Group I base oils on the spot market two weeks ago and again last week, although the producer was also understood to be prioritizing domestic demand and contract obligations. Last week, the producer reportedly offered 60 metric tons of Group I SN500 at $1,750 per metric ton FCA Thailand for loading this month.

Indonesian producers were also expected to continue running plants at fairly high rates as their dependence on Middle East crude was more limited than other Asian refiners.

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.

In China, activity was expected to pick up after the Labor Day holidays on May 1-5, but domestic producers decided to maintain Group I base oil prices as they hoped to attract business in a lackluster demand scenario. Lubricant consumption has been disappointing due to general market uncertainties, and blenders have therefore faced challenges to offset the higher production costs and have started to trim output levels.

Since March, China has instructed its top refiners to halt or severely restrict exports of diesel, gasoline and other refined products to ensure enough supply for the local population, and in India, prime minister Narendra Modi has urged limits in fuel use, travel and imports as the surge in energy prices placed pressure on the country’s foreign exchange reserves.

Group I import prices inched up in India this week against a backdrop of climbing domestic prices as supplies remained snug. Group I grades were heard to have increased by $10/t week-on-week on a CFR India basis. Even after the moderate increases, it was difficult for Indian consumers to secure cargoes as prices were more attractive in other regions and cargoes were therefore diverted there.

Group II

The number of Group II spot offers remained very limited as most base oil producers were focusing on meeting term obligations and had very few additional volumes for spot business, but there was a sense that the situation was going to improve.

Oil supply disruptions in the Middle East, and the fact that most Asian refineries are built to run on Middle East crude slates had resulted in reduced run rates at many refineries. Furthermore, government mandates required that refiners prioritize fuel production over other refined products such as base oils to ameliorate the gasoline and diesel price increases and ensure fuel supplies for businesses and the general population.

However, some refiners have been able to utilize strategic emergency oil supplies and have also imported oil from other origins including the Americas and Africa, and although yields were not expected to be as high, capacity utilization was expected to improve.

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 heard to have restarted production late last week. 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, but is now expected to start offering spot cargoes next month.

In Taiwan, the sole Group II producer, Formosa Petrochemical, was understood to have kept its domestic postings steady this month, after several weekly upward adjustments in March and April. Sources said it was likely because the tight conditions in the Group II segment were starting to ease. The producer was heard 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, although the company did not disclose its operating rates. 

There have been reports of small Group II spot offers emerging from South Korean suppliers and prices have remained steady or edged down slightly from a week ago, which seemed to be an indication that the supply situation was improving, according to sources.

In anticipation of improved Group II availability, buyers and sellers largely maintained bids and offers from a week ago, with offers from some suppliers softening slightly as well, although trading was still described as subdued as buyers were concerned they would be unable to offset the current offer prices by increasing lubricant increases. Economic uncertainties given the rise in fuel prices and other goods has dampened consumer spending in many Asian nations, and this could lead to reduced economic growth and a slowdown in lubricant demand in the coming months.

Chinese Group II producers kept prices largely unchanged, while imports continued to hover at loftier levels, dissuading buyers from securing spot cargoes and encouraging them to rely on domestic term supplies instead. Foreign producers seemed to be happy to offer the limited Group II spot cargoes that have become available into countries that offered better margins, while some importers also resorted to re-exporting cargoes to higher-priced markets.

In India, there was growing concern that the climbing import prices seen over the last several weeks would trigger price increases for term supplies and domestic products this month as well, all while gasoil prices have declined and there were expectations that a peace deal between the U.S. and Iran could lead to a slump in crude oil values. Spot prices for imports continued on an upward trend given limited supply, with Group II cuts edging up by around $30/t week-on-week on a CFR India basis.

Group III

Group III grades were still extremely tight on a global scale due to the lack of Middle East shipments as cargoes were unable to be lifted from the region following Iran’s closure of the Strait of Hormuz. Base oil refinery shutdowns and force majeure declarations at three base oil plants in the Middle East also restricted supplies, with Group III spot prices moving up again during the week. Some consumers have been able to run blending plants on existing stocks, but these were likely to be exhausted over the next few weeks, while other blenders have resorted to trimming production as base oil prices were difficult to offset.

The Shell/Qatar Petroleum Pearl GTL plant, the ADNOC unit in Abu Dhabi and Bapco facilities in Bahrain have all been hit by Iranian missiles and 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 following a drone strike and has declared force majeure on its group operations. The declaration affects contractual obligations, but domestic supplies remain secure.

Similarly, ADNOC has also suffered some disruptions due to drone attacks, according to sources. As of May, ADNOC had not declared force majeure on its overall LNG or oil exports, despite significant disruptions to shipping in the Strait of Hormuz due to regional conflict. Instead, ADNOC is managing supplies by deferring some LNG cargoes and adjusting deliveries on a transaction-by-transaction basis, according to the publication Energy Intelligence. ADNOC has kept some supplies moving by utilizing the Abu Dhabi Crude Oil Pipeline to Fujairah, on the Red Sea, bypassing the closed Strait of Hormuz.

The Middle East producers have been able to continue shipping products from storage units in other regions such as Europe and the U.S., but these seemed to be nearing depletion and there were expectations that supplies would dry up this month or in early June if Middle East shipments did not resume soon.

Several Asian producers had cut run rates due to a shortage of Middle East crude oil, but run rates were expected to improve as some countries have been able to import crude oil from other origins outside the Persian Gulf, or have resorted to using strategic emergency reserves. Nevertheless, producers were expected to continue prioritizing term commitments versus spot business for the time being.

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 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.

SK-Pertamina has scheduled a 40-day turnaround at its Group III plant in Dumai, Indonesia, starting in May 2026, but no updates about the shutdown could be obtained before the publishing deadline.

In China, domestic Group III prices were maintained this week as suppliers protect market share, although the steep prices for imports discouraged many buyers from securing imported product. Since some regional producers have increased production rates, they were hoping to sell more volumes to Chinese distributors, but buying interest was thin because of demand uncertainties.

In India, Group III import prices edged up by $10-20/t on a CFR India basis from the previous week as supplies remained very tight, but the increases were more moderate than in the previous weeks as sellers faced resistance to steeper price indications.

Shipping

• A 3,000-ton cargo was quoted for shipment from Yeosu, South Korea, to Singapore between May 10 and May 30.
• 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.

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, with the company ostensibly declaring force majeure. 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, and the company may have resorted to shipping products from ports on the Red Sea.

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 tons per year 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 tons per year, 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 completed around May 8 and spot shipments were expected to resume in June.
• 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.
• 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 rose while stocks weakened on Monday as investors reacted to news that the U.S and Iran had failed to agree on a peace deal and that the two parties were seeking an extension to the current truce.

• Brent July 2026 futures were trading at $104.33 per barrel on May 11, down from $111.67/bbl for front-month futures on May 4 (ICE Futures Europe).
• Dubai crude futures (Platts) for June 2026 settled at $93.94/bbl on May 8, down from $97.59/bbl for front-month futures on May 1 (CME).

Base Oils
Spot base oil prices in Asia were somewhat mixed this week, with some assessments holding at unchanged levels on subdued activity and an absence of offers, some seeing downward adjustments as recent levels were deemed unworkable amid expectations of improved supply, and some edging up on tight fundamentals. 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 edged down by $40/t to $1,820/t-$1,860/t
SN500 was also adjusted down by $40/t to $1,820/t-$1,860/t
Bright stock assessed unchanged at $1,900-$1,940/t following a downward adjustment last week.

Group II
150N were lower by $30/t at $1,900/t-$1,940/t
500N was adjusted down by $40/t to $1,880/t-$1,930/t

FOB Asia

Group I
SN150 edged down by $20/t to $1,680/t-$1,720/t
SN500 also lower by $20/t at $1,680/t-$1,720/t
Bright stock assessed unchanged at $1,890/t-$1,930/t

Group II
150N assessments heard lower by $20/t at $1,810/t-$1,850/t
500N also adjusted down by $20/t to $1,800/t-$1,840/t

Group III
4 cSt grade edged up by $40 to $2,240/t-$2,280/t
6 cSt higher by $50/t at $2,230/t-$2,270/t
8 cSt assessed up by $40/t at $2,080/t-$2,120/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.