Prices for most base oil grades continued to lose ground in Asia, with the exception of API Group III cuts, which were still short and supplies were not expected to improve any time soon given renewed hostilities between the United States and Iran. Crude oil prices have moved up once again as oil flows from the Persian Gulf remained constrained given Iran’s control of the Strait of Hormuz, while insurance and freight rates were expected to hover at steep levels as long as the conflict remained unresolved.
Media outlets reported that the U.S. had launched attacks at Iranian targets after Iran struck three commercial vessels that were transiting the strait, shattering a fragile ceasefire that had been established on June 17. While there had been a gradual increase in the number of vessels traversing the strait since the agreement, transit has ostensibly plunged to a standstill since the renewed attacks. This meant that once again, tankers carrying crude oil, base oils and other refined products were largely unable to leave the Persian Gulf.
While several OPEC+ members planned to increase crude production in August, the increase was not deemed sufficient to make up for the lack of shipments from several origins in the Middle East. Oil futures rose on Monday morning after the U.S. and Iran traded strikes as they vied for control of the Strait of Hormuz, with Brent trading up 3.5% at close to U.S.$79 per barrel.
Global oil demand was forecast to decline this year for the first time since the height of the COVID-19 pandemic in 2020, according to a report from the International Energy Agency. This is the result of steep prices and ensuing demand destruction, mainly in Asia, following the disruptions in the Middle East. China has significantly cut its crude oil purchases this year as it had amassed huge strategic inventories that it was able to utilize when crude oil prices surged.
The market uncertainties drove Group I and Group II base oil buyers to remain on the sidelines and delay purchases for as long as possible on hopes that prices would remain under pressure on improved availability and softer demand. Group III consumers, on the other hand, were anxious to secure any cargoes that became available as global supplies were insufficient to meet all requirements as long as Persian Gulf capacity remained trapped in the Middle East, and facilities there did not produce base oils at full tilt. Group III prices were therefore still on a relentless climb.
Group I
Group I base oil prices have fallen from their highs in April because supplies have started to lengthen, although some grades were still on the tight side in Asia and the descent was not as fast as the ascent. Demand has weakened as buyers refrained from purchasing volumes beyond those needed to run plants on a daily basis as they waited for prices to bottom out. Those consumers who had secured cargoes recently adopted a wait-and-see position and preferred to use up existing inventories. Their main concern was being able to sell lubricant stocks that were manufactured when base oil prices peaked in order to recoup the heightened costs.
Group I and Group II supplies have improved in Asia because refineries have been able to obtain crude oil from sources outside of the Middle East, although yields were not optimum for all refiners as most facilities have been built to run on Arab crude slates or similar crudes. Several countries had also allowed refiners to tap into strategic emergency crude stocks, but these were close to depletion in some countries and there were concerns that few fresh crude cargoes from the Middle East would become available if passage through the Strait of Hormuz remained disputed. Sourcing crude oil and base oils from alternative origins was also proving to be expensive as freight and insurance rates have increased significantly, sources said.
Group I spot prices continued to soften as more product has become available because of improved production rates and slowing demand. Additional Group I spot cargoes have come to the market in stark contrast with earlier in the Iran conflict when producers had completely suspended spot offers. However, activity was generally thin as uncertainties persisted.
A key Thai producer was heard to have offered small cargoes of Group I SN500 at $1,500 per metric ton and bright stock at $1,630/ton FCA Thailand this week, for loading in July. These prices reflected downward adjustments from offer levels at $1,580/t for the SN500 and $1,680/ton for the bright stock last week. There had been buying interest from Chinese buyers, but demand in China has slowed down and import prices were under pressure, although availability of imported base oils has declined. Small spot volumes of bright stock have also emerged in Indonesia in recent weeks.
Group I and Group II term supplies from a key Southeast Asian producer have been restricted over the last four months and the producer has informed customers that the reductions may continue in July but will likely improve in August.
Buying interest in regional cargoes was slightly dampened due to the emergence of some cargoes of unspecified origin that have been offered at significantly lower prices than the prevailing values from Southeast Asia. However, acceptance of these cargoes was limited.
In China, Group I import prices were not considered competitive compared to domestic supplies, which were plentiful and being sold at lower prices. This was particularly true for the light grades, which were readily available as China typically has an oversupply of the light grades while it has a chronic deficit of the heavy grades. There was therefore some interest in the heavy grade and bright stock of Thai origin.
Domestic refiners have adjusted prices for the light grades down to encourage purchases. However, the market has also entered a seasonal slowdown as most lubricant stocks have been built and even the lower prices failed to entice large-volume purchases. A number of suppliers were hoping to export some of their surplus, but buying interest in Chinese cargoes has declined as availability of other origins appeared to improve and demand in some markets such as India has also weakened on seasonal factors.
In India, Group I import prices have fallen by $20-60/t for the SN150 and SN500 grades, but the reductions were less pronounced for bright stock, which saw decreases of $10/t on a CFR India basis. A slowdown in buying activities given the start of the monsoon season, together with economic uncertainties which may impact lubricant demand have resulted in a more conservative approach from Indian buyers. Availability of locally produced products at competitive prices also encouraged buyers to turn to domestic suppliers to cover their base oil needs whenever possible.
There had been expectations that additional Group I cargoes from Iran would become available at competitive prices, but the U.S. reversed on July 7 its waiver of sanctions on Iranian exports of crude oil and refined products given the resurgence in hostilities, likely cutting off access to the lower-priced material.
Group II
As was the case with Group I base stocks, Group II cuts were also under downward pressure in Asia given increased availability and slowing demand. The difference, however, was that there was also buying interest for Group II grades from regions such as Europe and the Americas, where supplies were tight and sellers were able to attain higher prices. This provided some support to Asian indications, and week-on-week decreases were less prominent than those for Group I grades. At the same time, complicated logistics and climbing freight rates may dampen some of the export activity into long-haul markets.
Group II availability had been curtailed at the end of June as the sole Taiwanese producer, Formosa Petrochemical, had shut down production unexpectedly due to feedstock supply issues at the affiliated refinery, but the plant has been restarted, according to sources. The producer has also resumed spot offers, which had been suspended while the plant was down, although bulk shipments may not be available until the end of the month.
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, sources said.
Meanwhile, South Korean Group II offers have become more abundant as plants were running well and spot supplies have improved. However, a producer was heard to have little availability of the light-viscosity grades as it has increased Group III production given the limited supply of these cuts. The switch has led to reduced output of light grades. A second producer continued to maintain allocations to be able to meet contractual obligations but was expected to be able to offer some spot supplies shortly.
The improved availability levels coincided with weaker demand, because blenders had faced difficulties recovering the rising production costs from finished products, and some blenders had opted for running plants at reduced rates or stopping production temporarily until they were able to place most of their lubricant inventories.
Supply levels were likely to continue growing because refiners were receiving crude shipments originating outside the Middle East, and some refiners have been able to tap into strategic oil supplies. However, national emergency stocks have reached critically low levels, and this could be very disruptive if significant Middle East flows do not resume soon.
In China, domestic supply levels have increased, and this continued to place 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.
While Chinese Group II producers had offered Group II spot export cargoes to destinations such as India, demand from these markets has weakened as buyers preferred to wait for prices to bottom out. Additionally, a seasonal slowdown during the monsoon period also dampened buying appetite. Chinese suppliers were mostly able to offer light grades since the heavy grades were less available within the Chinese supply system.
Imported Group II base oils saw reduced demand from Chinese buyers because prices were not as attractive as those from domestic suppliers. Domestic suppliers cut prices in order to encourage sales and relieve inventory pressure, particularly because of the light grades, and the gap between domestic prices and imports widened even further. At the same time, supply of the heavy grades remained more sparse as production yielded more light grades, and as a result, prices were firmer.
In India, Group II import prices slipped because of increased availability, with the Group II 150N and 500N grades falling by around $10-20/ton on a CFR India basis. There was heightened downward pressure on the 70N, with prices edging down by $25-30/ton. There had been more pressure from weaker crude oil and gasoil prices in previous weeks, but values have since ticked up given a flaring up of attacks between the U.S. and Iran.
Chinese Group II grades and some South Korean cargoes had been available in India at competitive levels, but Asian suppliers preferred to capture business in other regions where margins were higher. More competitive prices from Indian suppliers, who have adjusted domestic prices down, led buyers to rely more heavily on locally produced material.
Additionally, the start of the monsoon season, which dampens transportation, agricultural and industrial activities, prompted buyers to build inventories ahead of the heavy rain as they need to rely on available stocks to run plants if flooding occurs and products cannot be delivered. Since many buyers have already padded their inventories, buying interest has started to fade.
Group III
The breaching of the fragile ceasefire agreement between the U.S. and Iran has caused a setback in terms of shipments transiting the Strait of Hormuz as vessels were not guaranteed safe passage through the waterway. This situation was expected to exacerbate the Group III global supply shortages as no fresh shipments may be able to exit the Persian Gulf, despite preparations by at least one producer to resume export shipments. But even if export activity restarted, it may take some time for shipments to be arranged as the number of ship operators willing to risk passage was limited and the price of insurance has skyrocketed.
Adnoc was heard to have increased base oil operating rates at its plant at the Ruwais complex in Abu Dhabi in preparation for a resumption of export shipments. According to market sources, the producer had continued to run its Group II and Group III base oil facilities at reduced rates since the start of 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 had been scheduled to transit the Strait of Hormuz, according to sources, but it was not clear whether the ship had been able to leave the Persian Gulf.
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.
There were still uncertainties surrounding Bapco operations and whether the producer 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 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.
Group III producers were striving to fill the supply gap left by the absence of Middle East Group III barrels, although Asian capacity is not sufficient to meet global requirements. Asian producers 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 its spot availability.
In China, Chinese Group III prices continued to edge up on the back of higher international prices and snug supplies. The 4 cSt grade has tightened and prices have therefore jumped over the last couple of weeks. However, buyers were hesitant to pay the steeper prices because they were not sure they would be able to recoup the rising production costs.
At the same time, prices for the heavy grades fell because of lengthening supplies and limited buying interest. A couple of Chinese suppliers have resorted to exporting Group III base oils, but acceptance of this material was more limited than for products from other Asian and Middle East origins due to approvals and specific formulations.
In India, Group III import prices continued to move up given global shortages, with prices jumping by $100/t on a CFR India basis week on week, depending on the grade, but participants claimed that prices were not realistic as cargoes were largely unavailable. Group III scarcity in Europe and the U.S. prompted buyers there to accept sky-high levels and this meant that any available cargoes were more likely to move to those destinations.
While an Indian refiner has been able to offer domestic Group III supplies, it was heard that the supplier had allotted part of its production to exports as netbacks were very favorable, although it continued to supply its own downstream lubricant operations.
Additional domestic Group II and Group III capacity was expected to come online at the Gujarat Indian Oil plant in the third quarter of 2026.
Shipping
A few cargoes were discussed for possible shipment this month:
A 3,000-ton cargo was expected to be shipped from Onsan, South Korea, to Yanbu, Saudi Arabia, in the first half of July.
About 11,000 tons were discussed for shipment from Oman and Pakistan to Rotterdam in the second half of July.
A 2,500-ton cargo was mentioned for shipment from West Coast India to East Coast South America between July 7-17.
5,000-7,000 tons were expected to be lifted from West Coast India to Brazil between July 10-17.
A 2,500-ton lot was mentioned for shipment from Onsan to Merak, Indonesia, between July 10-24.
A 1,000-ton parcel was on the table for shipment from Onsan to Japan in mid-July.
A 2,400-ton cargo was discussed for shipment from Onsan to Huizhou, China, in the second 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 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 damage. Bapco operates a 400,000 t/y 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 had 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. The latest information indicates that ADNOC was preparing to ramp up production following news of a ceasefire in the Middle East on June 21, although these plans may be derailed by a resumption in hostilities on July 8.
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 have surged on escalating U.S.-Iran tensions and supply concerns related to the closing of the Strait of Hormuz.
Brent futures were trading at $79.03 per barrel on July 13, up from $71.57/bbl for front-month futures on July 6 (ICE Futures Europe).
Dubai crude futures (Platts) for August 2026 settled at $71.41/bbl on July 10, up from $66.52/bbl for front-month futures on July 2 (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, some holding at unchanged levels, and a few 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 $60/t at $1,560/t-$1,580/t
SN500 adjusted down by $60/t to $1,580/t-$1,620/t
Bright stock lower by $50/t at $1,740-$1,780/t.
Group II 150N steady at $1,760/t-$1,800/t
500N holding at $1,760/t-$1,800/t
FOB Asia
Group I
SN150 edged down by $60/t to $1,460/t-$1,500/t
SN500 lower by $60/t at $1,460/t-$1,500/t
Bright stock lower by $50/t at $1,580/t-$1,620/t
Group II 150N assessments heard down by $30/t at $1,720/t-$1,760/t
500N down by $30/t at $1,720/t-$1,760/t
Group III
4 cSt grade rose by $90/t to $3,080/t-$3,130/t
6 cSt higher by $100/t at $3,070/t-$3,120/t
8 cSt as assessed up by $120/t at $2,920/t-$2,960/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.