With a tenuous ceasefire between the United States and Iran keeping crude oil analysts on edge and oil prices trading within a narrow range, the focus in base oil markets continued to fall on supply and demand fundamentals. Persistent shortages of API Group III base oils drove prices up significantly, while easing conditions in the Group I and Group II segments has elicited some relief among buyers and has led to downward price adjustments. Most players agreed that prices had reached levels that consumers found unsustainable, particularly in several price-sensitive markets in Asia. Prices in other regions such as Europe kept moving up because buyers prioritized supply versus pricing and many large blenders were prepared to pay the current values to secure supplies.
An increase in vessel transit through the Strait of Hormuz since U.S. President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding on June 17 was seen as an encouraging sign that crude oil flows would resume soon. Several Middle East crude oil and base oils producers were readying their facilities to restart production. Even so, the damage sustained during Iranian drone attacks at the Shell Qatar Pearl gas-to-liquids (GTL) plant in Qatar was expected to keep at least one train off-line for an extended period and the global supply of Group III grades on the tight side.
Crude oil futures slipped on Monday as additional exports from key Persian Gulf producers were able to be shipped through the strait. Furthermore, OPEC+ members Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman have also announced that they would be boosting oil production by 188,000 barrels per day from August as energy markets have shown signs of recovery. After reaching $126/bbl in April, Brent futures have fallen back to pre-war levels near $72/bbl.
While the lower crude oil prices exerted downward pressure on base oil values, the main factor influencing pricing remained the tight supply and demand balance, particularly in the case of Group III base oils as the critical shortages were not expected to be corrected any time soon. Aside from reduced production levels in the Middle East, complex logistics and soaring insurance rates were anticipated to become roadblocks in the resumption of shipments.
Group I
While Group I base oils were still on the tight side in Asia, operating rates at several refineries and a slowdown in demand have resulted in increased availability, leading to softer prices. Some participants reiterated that prices had reached levels that were difficult to absorb and transfer down the supply chain, which led to buyers’ retreat from the market. Some consumers preferred to delay purchases in hopes of further downward adjustments, while a few did not have a choice but to secure product at current levels.
Refinery run rates appeared to have increased in Asia as refiners have been able to utilize strategic oil reserves and have received crude oil shipments from sources outside the Middle East. This had not been possible earlier in the conflict because shipments took several weeks to be arranged and delivered. While refineries expected lower yields of some base oil grades as most facilities have been built to run on heavy Arab crude, at least they were running, sources said. At the same time, there have been growing concerns that strategic reserves have been drawn down to critical levels and refiners will not be able to receive Middle East shipments soon. While more vessels are now transiting the Strait of Hormuz, logistics are still complicated and insurance rates have skyrocketed, sources said.
Group I spot prices continued on a downward trend as more product has become available because of higher production rates and slowing demand. Additional Group I spot cargoes have been reported in Southeast Asia and China, signaling a change from the early days of the war, when spot supplies had dried up.
A key Thai producer was heard to have offered a 200-metric ton cargo of Group I SN500 at $1,580 per ton and about 100 tons of bright stock at $1,680/ton FCA Thailand, for loading in July. These prices show a downward adjustment from levels near $1,615/ton FCA Thailand for the SN500 and $1,780/ton FCA Thailand for bright stock in mid-June. Chinese buyers were heard to have shown interest in the Thai material, but it could not be confirmed if they had concluded business.
There have also been reports of small volumes of bright stock on offer from Indonesia, at slightly lower levels than in the previous weeks as well.
A key Southeast Asian Group I and Group II producer has significantly reduced term supplies over the last four months and the producer has informed customers that the reductions for Group II supplies may continue this month, with Group I supplies also seeing some restrictions.
In China, import volumes have fallen because prices have reached levels that buyers found difficult to absorb. Distributors tried to avoid the risk of bringing in imported products at steep prices that they may not be able to recoup later on. Many consumers have therefore turned to domestic production to meet requirements. Domestic refiners have kept price levels stable or have increased them slightly on increased buying appetite.
The market has also entered a seasonal slowdown as most lubricant stocks have been built and blenders have turned more conservative in terms of purchases of fresh volumes.
In India, Group I import prices continued to be exposed to downward pressure on improved supply and lower crude oil and feedstock values. As was the case in China, a seasonal slowdown, but in this case caused by the start of the monsoons, also added to the downward pressure.
Imported Group I price assessments were reported to have edged down by around $20 per ton on a CFR India basis from the previous week. There were expectations that once the Strait of Hormuz reopened, Iranian Group I shipments to India would resume at competitive prices. The same situation applied to cargoes from other Middle East suppliers. However, for the time being, many buyers favored domestic supplies to avoid risks related to logistics and climbing freight rates.
Group II
Group II prices were reported as stable-to-soft because of improved supply levels against a background of softening demand. Suppliers were also eyeing export opportunities in Europe and the Americas and this offered support to pricing because there were expectations that barrels would move elsewhere if they were not taken by Asian buyers.
Supply levels were likely to continue improving because refiners were receiving crude shipments from origins outside the Middle East, and some refiners have been able to tap into national strategic oil supplies. However, some of these stocks were nearing depletion and this could be very disruptive if significant Middle East flows do not resume soon.
Base oil demand has weakened in Asia because blenders had difficulties transferring the rising production costs onto finished products, with some blenders opting for running plants at reduced rates or stopping production temporarily.
The sole Taiwanese Group II producer, Formosa Petrochemical, was heard to have shut down production last week because of a technical issue affecting feedstock supplies from the affiliated refinery. The producer had already been running at reduced rates due to feedstock supply issues in June, especially impacting production of the heavy grades. Bulk shipments were not anticipated to be available for shipment until the end of the month, while flexibag shipments may be shipped by mid-month. Domestic list prices from the producer were heard to have remained unchanged for July.
A key Southeast Asian Group I/Group II producer was expected to maintain term supply allocations this month, particularly on Group II cuts. The situation should improve in August, according to sources.
At the same time, South Korean Group II offers were expected to be more widely available as plants were running well and spot supplies have improved.
In China, domestic supply levels have grown and this was exerting pressure on prices. Chinese refiners had been able to continue running plants at full rates because the country had been stocking large amounts of crude oil since last year, and refiners were therefore less exposed to the Middle East crude supply crunch.
Chinese Group II producers have offered Group II spot export cargoes for loading in early July, with some base oil parcels heard to have moved to India over the last couple of months, and cargoes offered into Latin America as well. Sources expected prices to be competitive compared to South Korean offers, but acceptance of Chinese products might be limited in certain countries by formulations and approvals.
The price of imported Group II grades was not considered competitive compared to domestic supplies, with buyers turning to local supplies whenever possible. The scarcity of imported material supported the rise in domestic prices.
In India, Group II import prices continued to weaken because of lower crude oil and feedstock prices and increased availability. The Group II 150N and 500N grades saw downward adjustments of around $20-30/ton on a CFR India basis. There was heightened downward pressure on the 70N as Chinese barrels have become available, as well as South Korean material.
Offers from Asian suppliers into India were more limited in general as prices were more attractive in other regions, although there were reports of Chinese Group II grades having been available and some South Korean cargoes as well. However, the start of the monsoon season, which dampens transportation, agricultural and industrial activities was anticipated to impact base oil requirements. Some buyers were trying to build stocks as transportation and logistics can be disrupted by heavy rains in some areas.
Group III
The fragile ceasefire agreement between the U.S. and Iran seemed to be holding and this encouraged Middle East refiners to restart oil production and related refining activities. However, the resumption of shipments through the Strait of Hormuz was not expected to be immediate as numerous vessels remained trapped in the Persian Gulf, and insurance companies have been reluctant to offer insurance coverage on fresh shipments, or were quoting sky-high rates. Middle East facilities account for approximately 35% of the world’s Group III capacity and shipments were not anticipated to resume at full rates any time soon.
Some term customers had been able to continue receiving reduced volumes as they had been placed on allocation, but these cargoes were either on the water when the conflict broke out, or were shipped from storage. These barrels were heard to have been depleted, according to sources, so buyers were not likely to receive replenishments in the next couple of weeks. Those suppliers who were able to offer small quantities of OEM-approved material were able to raise price levels significantly.
At least one Middle East base oil producer was reported to have begun the process of restarting the plant and shipments: ADNOC was heard to have increased base oil operating rates at its plant at the Ruwais complex in Abu Dhabi. According to market sources, the producer had continued to run its Group II and Group III base oil facilities at reduced rates during the conflict for downstream supply to its own lubricant facilities, but the producer was planning to increase operating rates to reestablish exports. The company’s 100,000-ton Group II base oils unit and 500,000-ton Group III base oil plant had been temporarily shut down in early March following Iranian drone and missile attacks in Ruwais that started a fire at one of the refining units. Even though the base oil plant had not been damaged, ADNOC had shut down operations as a precautionary measure, but had restarted shortly after, according to media reports. ADNOC was expected to resume shipments to the U.S. and a vessel was scheduled to transit the Strait of Hormuz in the coming days, according to sources.
The Shell Qatar Pearl gas-to-liquids (GTL) base oil plant in Ras Laffan, Qatar–the world’s largest GTL base oils facility–was expected to be only able to run one of its two trains after suffering Iranian drone attacks on one of the trains on March 18. The Pearl GTL plant was built with two production units (trains) of equal size. The integrated base oils unit within the plant has a production capacity of 30,000 barrels per day. Given the complex equipment of a GTL unit, the repairs may take up to one year to be completed, market experts said. While the second train might be able to produce base oils, there were rumblings that it would be undergoing a turnaround, which could exacerbate supply shortages even if the strait reopened soon. The Pearl plant receives feedstocks from Qatar Energy in the same industrial complex in Ras Laffan.
A deadly explosion that occurred at a gas processing facility in the Ras Laffan complex on June 21, killing at least thirteen people and injuring dozens, reportedly did not affect Qatar Energy’s liquefied natural gas facilities, but production there had been shut down temporarily after the accident as a preventative measure.
It was not clear whether BAPCO had been able to restart Group III production in Bahrain. According to Lloyd’s List Intelligence, vessel movements in Bahrain have resumed, but BAPCO operations remained suspended. A fire at BAPCO’s refinery in Maameer, Bahrain, on March 5 following an Iranian attack had forced the producer to shut down and declare force majeure on its group operations, although the company confirmed that domestic supplies remained fully secured under pre-established contingency plans. At the time, sources familiar with the plant’s operations had said that Group III production was unaffected by the fire, but some reports indicated that production had stopped temporarily for damage assessments. An official company report on whether the plant had been restarted was not available by the publishing deadline.
Meanwhile, Group III production from Asia appeared to be the bright spot on the Group III horizon. While Asian Group III capacity is not deemed sufficient to fill the vacuum left by the absence of Middle East Group III supplies, Asian producers have continued to ship Group III grades for the most part, and have increased production rates after securing crude oil from alternative sources in regions outside of the Middle East.
At least one South Korean producer and the Malaysian producer were heard to have been running plants at high rates because the South Korean supplier’s refinery has diversified its crude sources over the past few years, and the Malaysian supplier has been able to utilize domestic crude oil.
However, there were reports that the producer in Malaysia was planning to start a 45-day turnaround in August and would be building inventories to cover term commitments, which would restrict spot availability.
In China, Chinese Group III producers were heard to have started selling cargoes overseas, especially of the heavy grade, but acceptance of this material was more limited than for products from other Asian and Middle East producers due to approvals and specific formulations.
The shortage of Middle East Group III grades has offered support to domestic pricing, with some Chinese buyers accepting these prices as it was not clear when Group III base oils shipments from the Persian Gulf would be able to reach China.
In India, Group III import prices continued to edge up, with prices moving up by $50/ton on a CFR India basis, depending on the grade, but participants underscored that prices were not realistic as cargoes were largely unavailable. Europe and the U.S. were experiencing Group III shortages and buyers seemed desperate to secure supplies at any price, attracting any available cargoes to those destinations.
While an Indian refiner has been able to offer domestic Group III supplies, it was heard that the supplier had assigned part of its production to exports as netbacks were very favorable, although it continued to supply its own downstream lubricant operations. A trader was understood to have secured an Indian 4 cSt cargo for shipment to the U.S. for August arrival, although these grades do not carry approvals.
Additional domestic Group III capacity was expected to come online in India in the third quarter of 2026, when Indian Oil Corp. was anticipated to bring a new 235,000-ton/year Group II and Group III plant online in Gujarat, according to a presentation at the ICIS conference in Singapore last month.
Shipping
Details of a recently concluded shipment emerged this week. A 15,500-ton cargo was heard to have been shipped from Singapore to Mumbai and JNPT, India, on the Ginga Pioneer between June 20-25.
A few cargoes were discussed for possible shipment this month:
6,000-8,000 tons of two base oils grades were mentioned for shipment from Dumai, Indonesia to Jakarta, also in Indonesia, between July 15-22.
A 4,000-ton cargo was discussed for shipment from Cilacap, Indonesia to Jakarta in the first half of July.
A 9,000-ton lot was expected to be shipped from Yeosu, South Korea, to Southeast Asia between July 1-10.
A 2,000-ton cargo was quoted for loading in Thailand to Mid China in the first half of July.
A 3,000-6,000-ton lot was mentioned for possible shipment from Thailand to Greece in the second half of July.
A 6,400-ton parcel was quoted for shipment from Yeosu, South Korea, to Vietnam and/or Malaysia in the first half of July.
Production
Qatar Energy halted production of liquid natural gas (LNG) and other products following drone attacks on its facilities in Ras Laffan and Mesaieed in early March. 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. One train at 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 damaged train was expected to remain shut down for several months, possibly a year.
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 on March 10. 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, although this could not be confirmed. The latest information indicates that ADNOC was preparing to ramp up production following news of a ceasefire in the Middle East on June 21.
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 was expected to have been completed in mid-June.
Petrochina Fushun started a turnaround in early May that was expected to have been 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 (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.
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
Formosa Petrochemical unexpectedly shut down its Group II base oils plant in Mailiao, Taiwan, due to feedstock supply issues given technical problems at the affiliated refinery, in early July. It was not clear when the plant would restart, but some shipments were heard to have been delayed. Formosa had postponed a scheduled turnaround and catalyst change plant from the fourth quarter of 2025 to third quarter of 2026.
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 have resumed 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.
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, and was expected to compete a Group II/Group III expansion at Gujarat in the third quarter of 2026.
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.
In China, Shanxi Lu’an started a partial turnaround at its plant in Changzhi in late May and was expected to restart around June 22.
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 slipped on Monday on expectations of improved flows from the Middle East amid weak demand in the sport market and OPEC+ plans to increase output as of August.
Brent September 2026 futures were trading at $71.57 per barrel on July 6, down from $72.55/bbl for front-month futures on June 29 (ICE Futures Europe).
Dubai crude futures (Platts) for August 2026 settled at $66.52/bbl on July 2, up from $66.37/bbl for front-month futures on June 26 (CME). (There was no trading on the CME on July 3 due to the U.S. Independence Day holiday).
Base Oils
Spot base oil prices in Asia were mixed again this week, with some assessments moving down on expectations of improved supply and lower feedstock costs, and some jumping on persistently tight fundamentals and regional shortages. Prices have been notionally adjusted to reflect current market conditions and sentiment, but trading continued to be limited and transactions remained difficult to track, especially for Group III grades, as there was hardly any spot product to be obtained.
The price assessments 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 assessed down by $40/t at $1,620/t-$1,640/t
SN500 adjusted down by $30/t to $1,640/t-$1,680/t
Bright stock lower by $40/t at $1,790-$1,830/t.
Group II
150N adjusted down by $30/t to $1,760/t-$1,800/t
500N lower by $20-30/t at $1,760/t-$1,800/t
FOB Asia
Group I
SN150 edged down by $10/t to $1,520/t-$1,560/t
SN500 lower by $20/t at $1,520/t-$1,560/t
Bright stock lower by $30/t at $1,630/t-$1,670/t
Group II
150N assessments were heard down by $10/t at $1,750/t-$1,790/t
500N down by $10/t at $1,750/t-$1,790/t
Group III
4 cSt rose by $40-50/t to $2,990/t-$3,040/t
6 cSt higher by $40-50/t as well at $2,970/t-$3,020/t
8 cSt assessed up by $20/t at $2,800/t-$2,840/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.