Markets awoke to news of a tentative ceasefire between the United States and Iran on Monday, fanning hopes of an end to the ongoing conflict and a reopening of the Strait of Hormuz. An official signing ceremony of the framework agreement was scheduled in Switzerland on June 19. The deal includes terms to permanently end hostilities on all fronts — including Lebanon — and the lifting of the U.S. blockade on the strait, but leaves the question of Iran’s nuclear capabilities unresolved. Crude oil prices immediately reacted to the news and fell on expectations that Middle East crude flows would resume, exerting pressure on base oil values. Base oil prices for API Group I and Group II cuts were already on a downward trend, but Group III grades remained at elevated levels because a significant portion of the world’s production was still trapped in the Persian Gulf.
Brent futures had been hovering near U.S.$90 per barrel, but fell to the low $80s/bbl on Monday as the tentative deal was announced, while world shares prices soared. The ceasefire was welcome news in the energy complex, but experts warned that global oil inventories have reached critically low levels and it would likely take several months for crude flows to attain pre-war volumes. Ship operators and insurance companies also need to regain confidence that the pact will hold before shipments from the Middle East resume.
Group I
Group I spot prices have seen downward adjustments as more product has become accessible because producers have been able to increase production rates. While many suppliers had faced difficulties obtaining crude oil to run refineries after the start of the war in Iran, several countries have imported crude oil from alternative sources, or have authorized refiners to tap into strategic emergency oil supplies. These cargoes had taken a few weeks to arrive but have now been processed, allowing for more refined products to enter the market.
At the same time, base oil prices had reached a critical point where many buyers were unable to justify orders as they did not expect to be able to offset the climbing production costs amid cash flow constraints and credit limitations. This had led to falling demand, which is now contributing to a lengthening of supplies and softer prices. Some blenders have also maintained a conservative attitude in terms of purchases as they did not want to be caught holding pricey inventories when values were going down. Some consumers had no choice but to accept the current prices because their base oil inventories had been depleted.
Additional Group I spot cargoes were entering the trading scene from Southeast Asia, Japan and China, reflecting an increase in supplies after several weeks of suspended offers.
It was heard that a Japanese supplier that had offered several Group I cargoes in the previous two weeks had been able to conclude business involving several grades.
Thai producers have also come back to the spot market and offered a number of spot cargoes involving heavy grades. One Thai supplier presented flexibag volumes of Group I SN500 lot in the low $1,600s per metric ton and bright stock in the high $1,700s/ton FCA Thailand for June/July loading this week, reflecting small downward adjustments from the previous week. A second Thai supplier was heard to have offered a small spot cargo of bright stock as well.
An Indonesian producer was understood to have issued a tender involving up to 200 tons of Group I SN130 on June 5, which closed on June 10. The Indonesian producer had not been actively offering spot cargoes after the start of the conflict because it was focusing on contractual obligations, but had been expected to begin offering spot supplies this month.
As previously reported, a key Southeast Asian Group I and Group II producer had 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.
In China, demand has eroded because many smaller blenders were unable to absorb the rising production costs of base oils and additives and have opted for trimming operating rates at their blending facilities, reducing base oil purchases. A seasonal lull exacerbated the consumption pullback and placed downward pressure on domestic prices.
Import prices were considered to be too high compared to local pricing and import activity has therefore slowed down in China, although some buyers were still interested in acquiring imported product, depending on location and grade, with bright stock in particular attracting some attention.
In India, Group I import prices were largely steady from the previous week, although bright stock saw small downward adjustments of around $10-20 per ton on a CFR India basis because of expectations of reduced demand during the monsoon season, which has just started. Agricultural, transportation and industrial activities generally see a slowdown during the monsoon season, although forecasts called for an El Nino-weakened monsoon this year that will bring the lowest rainfall in 11 years, fueling concerns over crops, food prices and growth alongside inflationary pressures from the Iran war, Reuters reported.
Buyers were trying to use up existing inventories before venturing out to secure fresh cargoes, and preferred to rely on domestic supplies. Shipments of lower-priced Group I grades from Russia have dried up because of damages at Russian refineries from Ukrainian attacks and a need for producers there to prioritize domestic demand.
Group II
Group II prices seemed to have stabilized as suppliers were able to find buyers in other regions, including Europe, the U.S. and Latin America that were willing to pay steeper prices. The price surge seen since the start of the Iran war has subsided because production levels have improved as refiners have been able to receive crude oil from sources outside the Middle East or have resorted to using national emergency oil supplies. However, this has led to reduced output of the heavy grades given the different crude oil slates utilized versus the heavier, sour Arab crude most refineries typically run on. A small number of Group II refiners that also produce Group III cuts were expected to increase Group III output to fill production gaps and to capitalize on soaring Group III margins.
Demand in Asia has also suffered a setback because some consumers found it challenging to offset the mounting production costs and had withdrawn from the market, opting for running plants at reduced rates or stopping temporarily. Lubricant increase implementation has been spotty because of high fuel prices, inflation and economic uncertainties that dampened consumer spending.
An uptick in the number of Group II spot offers came from South Korean producers, where plants were said to be running well. A key South Korean Group II refiner, Hyundai Oilbank-Shell, had shut down operations to perform maintenance work in early April but restarted production during the first week of May and was reported to have been able to offer spot cargoes this month.
Taiwanese Group II producer Formosa Petrochemical was understood to be focusing on term commitments and domestic product needs, but it was also offering flexibag volumes for spot business. The producer’s discounts for formula-linked accounts have widened for the light grades, according to sources.
As was the case for its Group I grades, a key Southeast Asian Group I and Group II producer was expected 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 Chinese tender involving Group II light grade emerged during the week and was anticipated to attract interest for cargoes loading in late June or early July as prices were expected to be competitive compared to South Korean offers.
Import prices in China continued to be supported by a lack of offers because regional cargoes are lured to regions that offer better netbacks, but plentiful domestic supplies were able to meet a large part of the current demand, although plant shutdowns might tighten supplies. Offers of Taiwanese products have surfaced, but at higher levels than domestic prices.
In India, Group II import prices were holding steady from the previous week, although there is some pressure on the Group II 70N grade on slipping gasoil prices.
Group II offers emerging from China at competitive prices were being sought alongside domestic supplies. Offers from South Korea were more limited, with one producer that typically exports to India not offering any material this month, and a second producer not able to supply the light grade. Offers from Asian suppliers into India were more limited in general as prices were more attractive in other regions.
Group III
The Group III segment continued to show extremely tight fundamentals because base oil plants in Qatar, Bahrain and Abu Dhabi have seen output disruptions after suffering Iranian drone attacks, and shipments from the Persian Gulf were still largely unable to traverse the Strait of Hormuz. There were expectations that the tentative ceasefire agreement between the U.S. and Iran over the weekend would lead to a reopening of the strait and a resumption of Group III shipments, although production was anticipated to take some time to resume as some trains were still being repaired, and the restart process is not immediate.
Asian producers have increased production rates after securing crude oil from alternative sources in the Americas, Africa and Australia, but many still prioritized contract volumes and had little to no extra material to offer for spot business, with some customers kept on strict or reduced allocations.
While refining yields may be affected by the use of crude oil from sources outside the Middle East, a key South Korean supplier, SK Enmove, 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. Other suppliers were running plants at the highest rates possible to produce enough base oils to fulfill term obligations and provide some spot supplies.
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, some traders have started to offer Group III spot barrels from Chinese producers to regional buyers because demand has softened and they were facing a surplus, but acceptance was more limited than for products from other Asian and Middle East producers. Local producers have also gained domestic market share since Middle East products have been largely unattainable.
In India, Group III import prices remained at elevated levels, with prices moving up by $80-100/ton on a CFR India basis, discouraging buyers from acquiring additional cargoes. Some consumers have turned to domestic supplies, although they were still limited in terms of volumes, while others delayed purchases for as long as possible in hopes that the tentative ceasefire would lead to a reopening of the Strait of Hormuz and increased global supplies of Group III grades. A few buyers have also resorted to utilizing Group II cuts instead of Group III oils whenever possible.
Shipping
A few cargoes were being discussed for shipment this month and the next:
A 2,800-ton lot was mentioned for shipment from Onsan, South Korea, to China in mid-June.
A 3,000-ton cargo was discussed for shipment from Yeosu, South Korea, to Antwerp-Rotterdam-Amsterdam between June 12-20.
A 6,400-ton parcel was quoted for shipment from Yeosu to Vietnam and/or Malaysia in the first half of July.
About 3,000 tons were expected to be lifted in Onsan for Indonesia in the second half of June.
Approximately 8,000 to 9,000 tons were discussed for lifting in China and Taiwan for West Coast India in June.
Between 1,700-7,000 tons were mentioned for possible shipment from Mailiao,Taiwan, to Port Klang, Malaysia, in mid-June.
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 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
CNOOC Taizhou started a turnaround at its Group I/II plant in Jiangsu, China, in mid-April that will be completed in mid-June.
Petrochina Fushun started a turnaround in early May that will be completed in late June at its Group I plant in Fushun, China.
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 with 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.
Pertamina was expected to embark on a one-month turnaround at its Group I plant in Cilacap, Indonesia, in April.
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 shut down its Group II/Group III plant in Yeosu, South Korea, in early May to complete a month-long turnaround. The plant was expected to have been restarted.
- 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
SK-Pertamina (Patra SK) will complete a 40-day turnaround at its plant in Dumai, Indonesia, which started in early May, in mid-June.
Petronas was heard to have postponed a turnaround at its Group II/III Melaka plant in Malaysia from June to August 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 tumbled on Monday, June 15, after Iran and the U.S. reached a deal that was expected to reinstate the flow of crude oil and other products from the Persian Gulf through the Strait of Hormuz.
Brent August 2026 futures were trading at $82.90 per barrel on June 15, down from $97.58/bbl for front-month futures on June 8 (ICE Futures Europe).
Dubai crude futures (Platts) for July 2026 settled at $80.83/bbl on June 12, down from $85.56/bbl for front-month futures on June 5 (CME).
Base Oils
Spot base oil prices in Asia were again mixed this week, with some assessments reported as stable, others softening on expectations of improved supply, and some edging up on persistently tight fundamentals. Prices have been notionally adjusted to reflect current market conditions and sentiment, but trading continued to be limited 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 $20/t to $1,660/t-$1,700/t
SN500 adjusted down by $20/t to $1,700/t-$1,740/t
Bright stock lower by $10/t at $1,860-$1,900/t
Group II
150N was adjusted down by $10/t to $1,820/t-$1,860/t
500N lower by $10/t at $1,830/t-$1,880/t
FOB Asia
Group I
SN150 edged down by $20/t to $1,560/t-$1,600/t
SN500 lower by $30/t at $1,600/t-$1,640/t
Bright stock prices adjusted down by $40/t to $1,700/t-$1,740/t
Group II
150N assessments steady at $1,780/t-$1,820/t
500N was also stable at $1,780/t-$1,820/t
Group III
4 cSt grade edged up by $80/t to $2,850/t-$2,890/t
6 cSt higher by $80/t at $2,840/t-$2,880/t
8 cSt assessed up by $80/t at $2,690/t-$2,730/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.