Weekly Asia Base Oil Price Report

Crude oil prices were highly volatile, falling ​nearly 6% to two-week lows on Monday as optimism grew that the U.S. and Iran were much closer to reaching a peace deal, even though they have not been able to agree on key issues such as blockades on the Strait of Hormuz. As of Monday evening, the strait remained almost completely closed to tanker traffic and the U.S. maintained its blockade on Iranian vessel movements.

As mentioned previously, a large number of refiners in Asia had been forced to reduce operating rates because of difficulties securing enough crude oil from the Middle East to run their facilities given the closure of the crucial waterway that provides the only sea passage from the Persian Gulf to the open ocean. Some of refiners had also given priority to distillates production versus that of base oils to protect the general population from fuel shortages. However, many countries have imported crude from other origins, or have been allowed to use national strategic emergency reserves, leading to improved production rates.

Some countries like Japan also allow Middle East nations to store crude oil within their territories. A tanker carrying crude oil from the United Arab Emirates arrived in Japan last week to refill a joint stockpile it holds with Saudi Arabia and Kuwait in Southwestern Japan. Japan’s government said this is the first replenishment since it started releasing oil from the reserves amid the worsening situation in the Middle East, according to an NHK World report. Japan has been tapping into these reserves since late March. The industry ministry said this has reduced the stockpile from six days’ worth of consumption to one, which illustrates that even under the best of circumstances, Asian nations still are vastly dependent on the constant flow of Middle East crude imports.

Group I

There have been reports of fresh API Group I spot cargoes being offered out of Southeast Asia and China, which was seen as a sign that supplies might be improving compared to a month ago, when hardly any spot offers were available. This has caused some buyers to hold off on purchases as they expected supply levels to grow and prices to weaken. Indeed, Group I spot price indications have slipped from a week ago. Sources reported that increased supply volumes had placed downward pressure on Singapore ex-tank prices and FOB Asia prices as well.

Many blenders have also faced challenges when trying to offset the steep raw material increases through lubricant and finished products price hikes as customers have resisted the higher prices, and manufacturers have therefore opted for trimming production. There were reports of some smaller operations even considering shutting down for good as current difficulties appeared unsurmountable.

Several spot cargoes have surfaced in Thailand, with one supplier understood to have some small cargoes of Group I SN500 available for spot business while also meeting domestic demand and contract obligations. Thai Lube (TLB) reportedly offered a small Group I SN500 lot near $1,690 per metric ton FCA Thailand for loading between the last week of May and June 10. This price was adjusted down from an offer at $1,750/t the previous week and was valid until May 29. There was no bright stock offered from the supplier, indicating that this grade remained fairly tight in the region.

While Indonesian producers were somewhat insulated from the Middle East oil supply constraints as their dependence on Middle East crude was more limited than for other Asian refiners, there have been no spot offers heard from an Indonesian supplier that typically participates in the spot market, with sources indicating that there may not be any availability until June.

Chinese domestic producers have also resorted to exporting Group I and Group II cargoes to reduce domestic inventories and have done so at very competitive levels compared to South Korean offers. The Chinese market has entered a seasonal slowdown in terms of base oil demand, and suppliers anticipated stocks to increase,  exerting downward pressure on pricing. Bright stock was possibly one exception in that China has a structural deficit of this grade.

A key Southeast Asian Group I and Group II producer has significantly reduced term supplies in May after some reductions in the previous two months, and the producer has informed customers that there may be reductions for Group II supplies in June as well, while Group I availability was expected to improve.

South Korean producer S-Oil—a refiner which is majority owned by Saudi Aramco–was anticipated to start a partial shutdown at its Group I, II and III plant in Onsan in early May.

In India, Group I import prices were stable-to-firm this week, with bright stock heard to have climbed by about $20-30/metric ton on a CFR basis as volumes were difficult to come by. More Southeast Asian suppliers were expected to ramp up production rates and have started to offer spot availability, but the number of cargoes offered into India was anticipated to be limited as prices in other regions were more attractive. There was also reduced supply from Russia as a number of refineries have been hit by Ukrainian drones and missiles.

In early May, the Indian government launched a campaign to discourage traveling and driving to conserve fuels, given disruptions in shipments of crude oil, LNG and other refined products such as jet fuel from the Middle East amid surging prices. Whether this strategy works remained to be seen.

Group II

As was the case with Group I base oils, there was mounting downward pressure on Group II prices because values have climbed too fast and they have reached a point where buyers are unable to pass the hikes down the supply chain. Base oil buying interest has weakened due to the astronomical levels that prices have reached, and this freed up more barrels for spot business. The additional spot availability coming to the market added to the downward pressure.

Lubricant manufacturers have tried to increase lubricant and finished product prices to offset the escalating production costs, as not only base oils have increased, but so have additives, packaging and transportation. However, lubricant increase implementation has been difficult as economic uncertainties and high fuel prices dampened consumer spending.

While government mandates were still in place requiring refiners to prioritize fuel production over other refined products such as base oils to help reduce gasoline and diesel prices and ensure transportation and cooking fuel supplies for businesses and the general population, there has been an increase in refining run rates because of improved access to crude oil volumes. Some refiners have been able to utilize strategic emergency oil supplies and have also imported oil from other origins including the Americas and Africa, although yields were expected to be lower, particularly as far as the heavy grades were concerned.

As mentioned above, a key Southeast Asian Group I and Group II producer was understood to maintain term supply allocations in May and was likely to keep the same restrictions in place in June, particularly on Group II cuts.

A key South Korean refiner, Hyundai Oilbank-Shell, which had shut down operations to perform maintenance work in early April, was heard to have restarted production during the first week of May and was in a position to offer spot cargoes. The key Group II supplier exports significant amounts to countries such as China and India.

With more Group II spot offers coming from South Korea, and expectations that Formosa Petrochemical, the Taiwanese producer, will also be in a position to offer more spot supplies, prices in Asia have stabilized or edged down slightly. But there was also the risk that any Asian surplus supplies might be shipped to markets where margins were more attractive, such as Europe and South America, although freight rates have also skyrocketed in recent weeks, dampening some of the transactions.

Formosa was understood to have kept its domestic postings in Taiwan steady this month, after several consecutive upward adjustments in March and April. 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, allowing the supplier to offer more spot cargoes in the coming weeks. A Group II lot was heard to have been discussed for June lifting to Pakistan.

At the same time, additional spot cargoes were expected to emerge from China, where inventories have grown on a slowdown in domestic demand. Suppliers were eyeing markets in Southeast Asia where margins were expected to be more attractive. The only hurdle might be that China is typically short on the heavy grades, so suppliers may have fewer volumes of these grades to offer. Some of the tightness may be exacerbated by ongoing and imminent plant turnarounds in China.

Currently, refineries in Asia are running on lighter crude slates that come from origins outside the Middle East, and these crudes yield fewer heavy grades, so Chinese offers may not be able to fill the heavy-grade supply gap. Given the huge increases in Group II spot offers from other Asian origins, the arbitrage into China is effectively closed and import prices were mostly regarded as difficult to justify. Some imported cargoes that are already in the country were re-exported before undergoing customs clearance.

In India, domestic base oil prices have been on an upward trend, mirroring conditions in other parts of the world. Domestic refiners had been concerned about the fact that the U.S. waiver on sanctions placed on Russian oil exports would expire in early May, but the U.S. government granted a 30-day extension to the waiver, allowing Indian refiners to secure Russian cargoes at competitive prices and encouraging them to run facilities at top rates.

The Indian government also required refiners to prioritize fuel production and tried to discourage the general public from driving and embarking on air travel to conserve gasoline, diesel and jet fuel, which have been difficult to replenish in India given the closure of the Strait of Hormuz. The government has also raised the price of gasoline and diesel twice since the beginning of May—the first such move in four years– in an attempt to increase refiners’ margins, which have been squeezed as crude oil futures have skyrocketed and Middle East cargoes were still trapped in the Persian Gulf.

Group II import prices were moving in opposite directions, depending on the grade, with the Group II 70N slipping by $10-20/ton on improved availability and lackluster buying interest, and prices for Group II 150N and 500N reported as stable-to-higher by $20/t on a CFR India basis.

Group III

Global Group III supplies remained scarce, pushing prices to loftier levels. A significant portion of the world’s Group III supplies were still unable to be shipped out of the Persian Gulf due to Iran’s closure of the Strait of Hormuz and because of damages to regional facilities, while Asian and European Group III products were not sufficient to fill the global supply gap created by the absence of Middle East barrels.

Structural damages to production facilities in the UAE, Bahrain and Qatar by Iranian drone attacks have caused shutdowns and force majeure declarations, with at least two plants said to be unable to resume full production. Even if the plants were running full out, the producers would mostly be unable to ship product out because of the Iranian chokehold on the strait.

A Shell/Qatar Petroleum Pearl GTL train 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 declared force majeure on its group operations. The declaration affects contractual obligations, but domestic supplies remain secure and base oil deliveries were expected to resume once the Strait of Hormuz is reopened.

Similarly, ADNOC also suffered some disruptions due to drone attacks, according to sources, but the damage was minimal. As of May, ADNOC had not declared force majeure on its overall LNG or oil exports, despite significant disruptions to shipping in the strait due to the regional conflict. Instead, ADNOC is managing supplies by deferring some LNG cargoes and adjusting deliveries on a transaction-by-transaction basis. 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.

While some blenders have been able to replace Group III grades with Group II cuts or polyalphaolefins (PAOs) in some cases, those that needed to meet strict compliance with OEM specifications were seeing shortages that affected lubricant supplies and deliveries. PAO prices have also jumped following the start of the Iran war, making them less of a viable option.

Middle East producers have cut allocations to term customers and continued shipping products from storage units in other regions such as Europe and the U.S., but these were expected to be depleted soon, if they have not been exhausted already.

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.

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 balance of South Korean refiners have also started to use crude oil from other sources rather than from the Middle East, but their yields were expected to be reduced as facilities are built to run on heavier Middle Eastern sour crude slates.

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. The producer was expected to start building inventories ahead of a 45-day planned turnaround starting in August.

In China, Group III availability has tightened because there are almost no Middle East cargoes being shipped and domestic supplies were not sufficient to meet demand. South Korean availability was anticipated to grow, but spot cargoes were expected to be lured to other regions with higher margins. Consumption levels have declined on seasonal factors, and this has offered suppliers some relief in terms of meeting contractual obligations.

In India, Group III import prices were heard to have climbed by about $50/t on a CFR India basis from the previous week on limited availability. Most buyers faced difficulties passing on the increases to downstream segments and some blenders opted for reducing operating rates. Others used Group II grades instead of Group III cuts whenever formulations allowed. The difficulty for Group III buyers in India was that the limited number of spot cargoes that become available in Asia were likely to be drawn towards destinations that offered more substantial margins. Demand from the transportation and industrial applications segments was expected to be dampened by the monsoon season, which lasts from June until September.

Shipping

• A 3,000-metric ton cargo was expected to be shipped from Tianjin, China, to West Coast India between June 1-20.
• A 3,000-ton lot was mentioned for shipment from Taiwan to Karachi, Pakistan, in the second half of June.
• About 10,000-tons were quoted for shipment from Daesan, South Korea, to Zhoushan, China, in early June.
• A 7,500-ton parcel was discussed for shipment from West Coast India to U.S. East Coast in the first half of June.
• About 28,000 metric tons were discussed for shipment from Thailand to West Coast India between June 1-10
• A 1,400-ton parcel was quoted for lifting in Yeosu, South Korea, to Yokohama, Japan, between June 10-17.
• A 4,600-ton cargo was mentioned for shipment from Yeosu to Malaysia in the first half of June.
• A 1,500-ton lot was on the table for shipment from Yeosu to Vietnam in the first half of June as well.

Production

Qatar Energy halted production of liquid natural gas 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 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-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 temporarily for damage assessments. 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 plant shutdowns 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.
• Idemitsu was expected to start a scheduled turnaround at its Group I plant in Chiba, Japan, in mid-May that will last until July. The company secures Group III base oils required for its high-performance and eco-friendly engine lubricants through a partnership and a memorandum of understanding (MOU) with Saudi Aramco Base Oil Company (Luberef).
• 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 fell ​nearly 6% to two-week lows on Monday as optimism grew that the United States and Iran were getting closer to reaching a peace deal. But even if the was were to end tomorrow, it will take weeks, if not months, for Middle East crude flows to ne restored, keeping prices at high levels, according to analysts.

• Brent July 2026 futures were trading at $98.34 per barrel on May 25, down from $108.29/bbl for front-month futures on May 18 (ICE Futures Europe).
• Dubai crude futures (Platts) for June 2026 settled at $95.70/bbl on May 22, down from $101.63/bbl for front-month futures on May 15 (CME).

Base Oils
Spot base oil prices in Asia were mixed this week, with some assessments holding at unchanged levels on subdued activity and an absence of offers, some seeing downward adjustments as earlier 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 continued to be limited 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 $50/t to $1,750/t-$1,790/t
SN500 also adjusted down by $50/t to $1,750/t-$1,790/t
Bright stock assessed lower by $20/t at $1,880-$1,920/t.

Group II
150N lower by $50/t at $1,830/t-$1,870/t
500N adjusted down by $20/t to $1,840/t-$1,890/t, all ex-tank Singapore.

FOB Asia

Group I
SN150 edged down by $20/t to $1,640/t-$1,680/t
SN500 lower by $10/t at $1,650/t-$1,690/t
Bright stock adjusted down by $40/t to $1,820/t-$1,860/t

Group II
150N assessments heard lower by $10/t at $1,780/t-$1,820/t
500N steady at $1,780/t-$1,820/t

Group III
4 cSt edged up by $160 to $2,520/t-$2,560/t
6 cSt higher by $160/t at $2,510/t-$2,550/t
8 cSt assessed up by $160/t at $2,360/t-$2,400/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.