Weekly Asia Base Oil Price Report

Participants were also keeping an anxious eye on crude oil prices, which had softened after a ceasefire, but reversed course following news about Iranian strikes on vessels traversing the Strait of Hormuz and retaliatory attacks by the U.S. on Iranian targets. The attacks effectively breached the 60-day ceasefire agreement signed on June 17. Brent crude futures had hit their lowest levels since the start of the war on Iran on July 2, when prompt-month contracts for August delivery dropped to $70.82 per barrel. The price decline had been driven by negotiations to end the Iran conflict, but an escalation in hostilities has pushed prices to levels near $90/bbl.

The contended passageway remained mostly closed to traffic and this meant that neither crude oil nor refined products such as base oils would be able to leave ports in the Persian Gulf, where several refineries and at least three base oil facilities are located. Ship operators, crews and insurance companies were also reluctant to risk a crossing without assurances that vessels could do so safely.

The distributor of ADNOC base oils in the U.S., Penthol, has notified contract customers that the supplier had declared force majeure on contract supplies because of the closing of the strait, production disruptions, and other factors. In Abu Dhabi, ADNOC had reportedly been preparing to ramp up production following the ceasefire. According to reports, the company had been producing base oils at reduced rates following an Iranian attack on the Ruwais industrial complex on March 10 and was solely supplying its own downstream operations.

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 would be 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 spot prices slumped during the week on increased regional availability and weakening demand. Buying appetite has subsided given the recent price slide as buyers limited their purchases to small volumes and waited for prices to bottom out. Some consumers who had comfortable stock positions adopted a wait-and-see attitude and prioritized sales of existing lubricant inventories, which had been produced when raw materials were hovering at steeper levels.

Group I supplies have mushroomed in Asia because several refineries have been able to increase run rates following crude oil purchases from origins 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 closed. The continuation of the Iran conflict was expected to continue pressuring crude oil prices and freight rates, which squeezed refiners’ margins and pushed them to consider production of those products that were most profitable. In some instances, producers focused on fuel output to the detriment of base oils.

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 last week, for loading in July. These prices reflected downward adjustments from previous offer levels. 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 continued to be restricted and the producer has informed customers that the reductions may continue in July but will improve in August. However, this was still a question mark as crude supply constraints may affect the producer’s operations in the next few weeks.

Chinese producers have also decided to participate in regional spot business and have offered flexibag cargoes of Group I SN150 at competitive levels, below Southeast Asian indications. China typically has an oversupply of the light grades while it has a chronic deficit of the heavy grades.

At home in China, producers were dealing with growing inventories because buying interest was languishing given seasonal factors and the perception that supply was more plentiful, and buyers delayed purchases, hoping to achieve lower prices. The one cut that bucked the trend was bright stock, which was less available than other grades and was therefore able to maintain price levels largely unchanged.

Import prices were still not considered competitive compared to domestic supplies, which were plentiful, but there has also been an increase in imports from Thailand, possibly easing a tightening of availability when a local producer shuts down for maintenance next month.

In India, Group I import prices continued a downward trend, mimicking the behavior of Group I base oils in other Asian markets. Import prices fell by $10-50 per metric ton, with the smaller reductions pertaining bright stock, which saw decreases of $10/ton on a CFR India basis because of tighter availability. Representing an exception to the lower import prices was material from Iran, as availability was again constrained by U.S. sanctions on Iranian crude oil and refined products exports along with a blockade of Iranian ports due to the resurgence in hostilities, and prices were firmer, sources noted.

A slowdown in buying activity given the start of the monsoon season, together with uncertainties over short-term lubricant demand have resulted in a cautious attitude from Indian buyers towards purchases. Buyers also seemed to favor domestic supplies to cover their base oil needs whenever possible, as prices were deemed competitive.

Group II
Group II prices were also under downward pressure in Asia on prospects of growing availability and declining demand. However, compared to their Group I counterparts, Group II base oil prices underwent smaller downward adjustments and remained steady because of buying interest from other regions such as Europe and the Americas, where prices were holding more firmly. This offered Asian suppliers some export opportunities, but these were partly dampened by difficult logistics and steep freight rates.

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. Earlier in the conflict, many refineries had had to reduce run rates due to a lack of crude oil from the Middle East. However, national emergency stocks have reached critically low levels, and this could become a significant issue if Persian Gulf crude oil exports do not resume in the next couple of weeks. Furthermore, yields for the heavy-viscosity grades have fallen because some refineries were utilizing lighter crude slates from origins outside the Middle East.

Improved availability from several Asian base oil suppliers coupled with weaker demand has brought more spot offers to the market. Blenders who had been unable to absorb rising production costs when base oil and additive prices had shot up in April and May opted for running plants at reduced rates or suspended production temporarily until they were able to place most of their lubricant inventories and recoup some of those costs given credit and cash restrictions. Others were also hesitant to stock too much product when prices were on a downward trend.

At the same time, 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. Some buyers were counting on the increased availability from this source and delayed purchases until next month.

South Korean Group II spot offers have become sparser this week as suppliers have taken a more cautious stance given the ongoing conflict in the Middle East, and the possibility that crude oil prices could continue to edge higher. A producer was heard to have little availability of the light-viscosity grades as it has increased Group III production because of the limited supply of these cuts. The switch has led to reduced output of light grades. A second producer continued to maintain allocations to ensure fulfillment of contractual obligations.

The sole Taiwanese producer, Formosa Petrochemical, had shut down production unexpectedly in late June due to feedstock supply issues at the affiliated refinery, but the plant was restarted in early July, according to sources. Although the producer has resumed spot offers of small cargoes mostly, it was also trying to start building inventories to cover contract commitments during a scheduled turnaround in October.

In China, competitive offers of domestic products dampened buying appetite for imports, particularly of the light grades. Demand has not been robust in any case, as a seasonal slowdown meant that buyers were only interested in acquiring base oils to cover immediate needs and refrained from acquiring extra barrels at current price levels. These fundamentals were exerting pressure on import prices as well, although the price decline for the light grades was more pronounced than that for the heavy grades. A tighter supply and demand ratio for the heavy-viscosity cuts offered support to prices, but buying interest was lackluster in any case.

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 base oil producers were therefore less exposed to the Middle East crude supply disruptions.

Chinese Group II producers had offered Group II spot export cargoes to destinations such as India to reduce growing inventories at home, but regional demand has weakened as buyers preferred to wait for further developments given that most Group II base oil prices were under downward pressure.

Chinese light-grade cargoes have been available to the wider market in recent weeks at competitive levels and this has helped cover some requirements that were not fulfilled by other suppliers, who maintained steeper offers.

In India, Group II import prices for the heavy grades have moved up on tightening supplies, while the light-viscosity grades were steady-to-softer due to growing availability. Some Asian suppliers preferred to export to destinations with higher netbacks, and this curtailed the volumes of high-viscosity grades moving to India. Supplies of the heavy grades have also fallen because of the lower yields from refineries that are using crude oil from origins other than the Middle East.

The Group II 70N grade slipped by around $20-30/ton on a CFR India basis, while prices for the 150N were largely unchanged. Conversely, the 500N inched up by $20-30/t on a CFR India basis. Softer crude oil and gasoil prices in previous weeks had exerted downward pressure on prices, but values have strengthened given renewed attacks between the U.S. and Iran.

Competitive prices from Indian suppliers, who have adjusted domestic prices down, encouraged buyers to rely more heavily on locally produced material. Many buyers had built inventories ahead of the heavy rain season and buying interest has therefore started to subside.

Group III
The Group III supply situation seemed to turn more dire each additional day that the Strait of Hormuz remained closed to most vessel traffic, and base oils were unable to be lifted from ports on the Persian Gulf. The region represents one fifth of global Group III capacity and even if the remaining plants in other regions were to run at top rates, volumes would not be sufficient to cover the shortages caused by the conflict in the Middle East. Experts also warned that the longer the disruptions lasted, the more difficult it would be to resume production of crude oil and refined products and increase export activity to pre-war levels.

The restart process does not involve just turning on a switch at the refinery—it is a complicated process, which sometimes does not go as smoothly as expected, participants noted. Group III global supply shortages could also be exacerbated by the limited number of ship operators willing to risk passage of the Strait of Hormuz, and insurance companies were reluctant to cover these voyages as well.

While Abu-Dhabi producer ADNOC had been expected to ramp up base oil operating rates at its plant at the Ruwais complex in preparation for a resumption of export shipments, these plans appeared to have been scrapped as vessels were largely unable to load at Persian Gulf ports. As mentioned above, the U.S. distributor of ADNOC material was compelled to declare force majeure on contract commitments for an indeterminate period because the company is unable to ship product out of the UAE. In a letter sent to customers on July 15, Penthol said the disruptions in the Middle East had resulted in the suspension of AD base oil supply from ADNOC, and this had affected its ability to meet contractual obligations, adding that transportation difficulties, unplanned outages, equipment failures, power disruptions, government actions, war-related events and reduced or unavailable supply had caused the FM declaration. Penthol also said that the company was monitoring developments and communications from ADNOC and evaluating alternative supply arrangements and logistics to restore deliveries as soon as possible.

According to market sources, ADNOC had run its Group II and Group III base oil facilities at reduced rates since the start of the conflict to feed downstream lubricant operations, following an Iranian drone strike in March. The company’s 100,000-metric-ton Group II base oils unit and 500,000-ton Group III base oil plant had been temporarily shut down following the attack that had 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.

Another key facility, 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 has two production units (trains) of equal size. Given the complex equipment of a GTL unit, the repairs may take up to one year to be completed, market experts said. The Pearl plant receives feedstocks from Qatar Energy in the same industrial complex in Ras Laffan.

There were still uncertainties surrounding Bapco’s operations and whether the producer had been able to restart Group III production in Bahrain. According to some media reports, 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.

Many buyers have turned to Asian Group III base oils to fill the supply gap left by the absence of Middle East Group III barrels. However, Asian capacity is not sufficient to meet all requirements and consumers were dealing with supply shortages, even though Asian producers have increased production rates after securing crude oil from alternative sources in regions outside of the Middle East.

In China, Chinese Group III prices were also on an upward trend given severe global shortages and climbing international prices. Suppliers also faced some resistance to higher lubricant prices, which they were hoping to obtain to offset the rising production costs.

A couple of Chinese suppliers continued to look for Group III export opportunities, but these were restricted by acceptance of this material due to the approvals and specific formulations that some applications required.

A Chinese supplier was heard to have offered a light-viscosity cargo via a tender that closed on July 16, but the results were unavailable by the publishing deadline.

In India, Group III import prices continued to edge up in line with prices at other destinations, given the supply shortages triggered by the Middle East disruptions. Group III prices climbed by $50-100/ton on a CFR India basis week on week, depending on the grade. But higher prices in Europe and the U.S. continued to attract cargoes away from India, and buyers have resorted to utilizing Group II grades to replace Group III cuts whenever possible.

Domestic producer Indian Oil Corp. continued to offer domestic Group III supplies, but the producer was also pursuing export opportunities, although these products did not carry the necessary approvals for certain applications. The producer also maintained supply to its own downstream lubricant operations.

Indian Oil had started to supply Group III base oils from its plant in Haldia in December 2025, and additional 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-metric-ton cargo was discussed for loading in Mumbai, India, to Hamriyah, United Arab Emirates, in the second half of July.
A 2,250-ton parcel was quoted for shipment from Onsan, South Korea, to Singapore in late July.
Between 15,000 to 20,000 tons were mentioned for possible shipment from South Korea to West Coast India between August 15-20.
A 4,000-ton parcel was on the table for shipment from Port Klang or Malacca, Malaysia, to Genoa, Italy, or Hemiksem, Belgium, in 2H July.
A 6,000-ton lot was being considered for shipment from Yeosu, South Korea, to Vietnam in the first half of August.
A 4,000-5,000-ton was discussed for shipment from Tianjin, China, to West Coast India in 1H Aug.
A 5,000-6,000 metric ton cargo emerged for shipment from Ruwais, United Arab Emirates, to Mumbai or Hazira, India, between July 15 and August 1.
A 5,000-ton parcel was mentioned for loading in West Coast India to the UAE between July 15-25.
A 3,000-ton lot was quoted for shipment from Yanbu or Jeddah, Saudi Arabia, to Singapore between July 25-31.
A 3,000-ton cargo was being considered for loading in South Korea to Pakistan around Aug. 10.
About 11,000 tons were discussed for shipment from Oman and Pakistan to Rotterdam in the second half of July.
A 2,500-ton lot was mentioned for shipment from Onsan to Merak, Indonesia, between July 10-24.
A 2,400-ton cargo was discussed for shipment from Onsan to Huizhou, China, in the second half of July.

Production

QatarEnergy halted production of liquid natural gas 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 several months and has declared force majeure on 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, is offline. The unit uses natural gas from QatarEnergy to produce Group III base oils. The plant has nameplate capacity of 1.37 million tons of Group II/Group III base oils. The damaged train will stay shut down for up to a year until repairs to the highly specialized equipment are completed.

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 blaze was brought under control without providing further details about potential damage. Bapco operates a 400,000-tons-per-year Group III base oil facility in Sitra, in the Bapco refinery complex. Sources familiar with the plant’s operations said that Group III production was unaffected by the fire, but some reports indicated that production had stopped for damage assessments.

In Abu Dhabi, a suspected Iranian attack started a fire at the Ruwais Industrial Complex, leading authorities to shut down the country’s flagship refinery as a precautionary measure on March 10. Ruwais houses Adnoc’s Group II and Group III base oils plant. According to sources familiar with Adnoc’s operations, the base oil unit was undamaged during the attack as only one train of the refinery was affected, 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 were derailed by a resumption in hostilities and renewed closing of the Strait of Hormuz 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 be completed mid-June.

Petrochina Fushun started a turnaround in early May that was expected to be completed 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 Japan in recent years.

Pertamina reportedly embarked on a one-month turnaround at its Group I plant in Cilacap, Indonesia, in April 2026.

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, but restarted production the second week of July. Some shipments suffered small delays. 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 in June.

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 complete a Group II/Group III expansion at Gujarat in the third quarter of 2026.

Group II
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 was expected to bring more Group III supplies to the market in early 2026.

Prices

Crude Oil
Crude oil futures strengthened in early trading on Monday on an escalation of the Iran war and rising tensions around the Strait of Hormuz, with Brent crude topping $90 per barrel.

Brent futures were trading at $90.94 per barrel on July 20, up from $79.03/bbl for front-month futures on July 13 (ICE Futures Europe).

Dubai crude futures (Platts) for August 2026 settled at $80.42/bbl on July 17, up from $71.41/bbl for front-month futures on July 10 (CME).

Base Oils
Spot base oil prices in Asia were mixed 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 $100/t at $1,460/t-$1,480/t
SN500 also adjusted down by $100/t to $1,480/t-$1,520/t
Bright stock lower by $60/t at $1,680-$1,720/t.

Group II
150N down by $10/t at $1,750/t-$1,790/t
500N holding at $1,760/t-$1,800/t, all ex-tank Singapore.

FOB Asia

Group I
SN150 fell by $100/t to $1,360/t-$1,400/t
SN500 lower by $100/t at $1,360/t-$1,400/t
Bright stock dropped by $100/t at $1,480/t-$1,520/t

Group II
150N assessments heard down by $10/t at $1,710/t-$1,750/t
500N holding at $1,720/t-$1,760/t

Group III
4 cSt rose by $100/t to $3,180/t-$3,230/t
6 cSt jumped by $100/t at $3,170/t-$3,220/t
8 cSt also assessed up by $100/t at $3,020/t-$3,060/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.