Oil prices were on a general downward trek in the previous weeks, with Brent futures falling from around $74 per barrel in early April to $65/bbl in late May. However, prices had started to recover in early June when the United States and China embarked on trade negotiations, feeding hopes of an end to a trade war that was not only affecting product movements between the two countries, but also stock prices and oil futures on expectations of a global economic slowdown.

U.S. President Donald Trump also intended to negotiate separate trade deals with several other countries, with current tariff levels hampering exports from many origins and leading to reduced freight movements on several routes.

Group I

The API Group I segment remained rather tight, reflecting conditions seen for more than a year as a consequence of permanent plant closures and maintenance shutdowns in Japan and Southeast Asia (see Production below).

However, the tight situation was expected to start easing as some plants have restarted, while demand has seen a seasonal decline. Requirements from the marine segment have also weakened on reduced shipping activity due to the tariff upheaval.

Availability from Southeast Asia reportedly increased and was expected to grow even more plentiful in the second half of the year when the aforementioned units came back on stream. There were also expectations that ExxonMobil would bring an expansion online at its Singapore base oil plant in July. The Group II plant will be producing a heavy-viscosity grade with similar characteristics to Group I bright stock. Bright stock continued to be in high demand in Asia and production has plunged given the permanent closure of several Group I units in recent years, with at least two plants shutting down in Japan over the last three years and a plant closure in China this year as well.

At the same time, base oil consumption in key markets such as China and India tends to weaken due to seasonal factors, with the monsoons in India causing logistical and transportation disruptions. The slowdown was also evident in China as requirements from the industrial, marine and heavy-duty transportation segments have fallen on the back of reduced manufacturing output and shipments due to steep U.S. tariffs on Chinese goods.

Prices for Group I base oils had also been moving up steadily in the previous months because of plant outages in Southeast Asia, Japan and the Middle East, coupled with keen buying interest from China and India. China suffers from a deficit of the heavy-viscosity grades, but buyers were trying to meet demand by using up existing inventories and purchasing material from domestic suppliers. But the current sluggish conditions in many lubricant segments in China have dampened buying interest for base oils. Importers were also very cautious about how much product to secure as they preferred not to hold large inventories.

In India, the start of the monsoon season typically leads to reduced demand and buyers opt for building inventories ahead of the heavy rains, when transportation and production may see disruptions. Most blenders were understood to be meeting product needs through term volumes and by purchasing base oils from domestic producers. Local suppliers have lowered Group I prices to encourage sales after turnarounds, and prices were deemed competitive.

The weaker demand in India counterbalanced the strained supply situation in Southeast Asia and the Middle East, particularly from Iran, where some Group I cargoes moving to India originate. A Thai producer was understood to be building inventories ahead of a shutdown due to start in July and there were fewer spot volumes on offer from Thailand as well.

The lack of Group I availability in the region had even prompted Group I shipments from the U.S. to India, which are not as common as Group II movements.

Group II

Group II base oils continued to face downward pressure on lengthening availability following the restart of regional units and a slowdown in demand in several countries. However, climbing crude oil and feedstock prices, together with a demand uptick in the Middle East were expected to partially limit any downward adjustments.

Buying interest in Group II imports in China sagged. Buyers did not seem eager to acquire much additional product as conditions in lubricant segments have been less vibrant than usual, likely due to economic uncertainties tied to the trade war with the U.S. Consumers have turned to domestic product, which was being offered at competitive prices and availability seemed plentiful because several Group II plants have started up in China in recent years, reducing the country’s dependence on imports.

There were additional offers and shipments of Group II grades of South Korean origin concluded into India, and spot prices of some cuts have edged down, although availability of the light-viscosity grade was less abundant, propping up prices. South Korean suppliers were also eyeing opportunities in the Middle East, shifting cargoes away from India.

Appetite for U.S. Group II cargoes was more muted because there were not many offers available as the U.S. market was fairly snug, and buyers worried that values may have weakened by the time the product reached Indian shores. Additionally, it was difficult to predict whether Indian base oil requirements would strengthen in the coming weeks, as the monsoon season is not typically over until September and economic activities tend to slow down over that period.

Group III

Group III prices have strengthened because of a tighter supply and demand balance, not only in Asia, but elsewhere as well because of ongoing turnarounds and steady demand. However, buyers have started to resist the higher indications. Suppliers opted for moving cargoes to higher-priced destinations such as Europe, leaving fewer volumes available for other regions. The 4 cSt grade showed steeper upward adjustments compared to its 6 cSt and 8 cSt peers because of healthy buying interest and snug supplies.

Import activity in China has declined as demand was seasonally weaker and automotive sales have also slowed down. Domestic Group III producers continued to offer competitive prices to keep imports away and maintain or gain market share.

In India, the tight Group III situation seemed to have less of an impact on pricing as Group III demand from the automotive, logistics and transportation segments was expected to be dampened by the heavy monsoon rains. Group III prices were therefore reported to be largely steady.

Shipping

Few fresh inquiries surfaced during the week. A 5,000-metric-ton cargo was expected to be shipped from Hamriyah, United Arab Emirates, to Singapore in mid-June.

A 5,000-8,000-ton cargo was mentioned for possible shipment from Ruwais, United Arab Emirates, to Mumbai, India, at the end of June.

Production

The global base oil supply and demand balance is likely to ease as a number of turnarounds will be completed and plants are expected to be restarted, although ongoing shutdowns at a few units, together with permanent closures over the last few years may continue to crimp supplies in some base oil segments.

In the Group I category, Indian refiner Hindustan Petroleum Corp. Ltd. (HPCL) was expected to restart its Group I unit in late April/early May after a partial turnaround that started in late Feb. HPCL was also heard to have completed a 45-day turnaround at its Group II trains in May, but this was not confirmed by the producer directly.

Also in India, Chennai Petroleum Corp. Ltd. (CPCL) had a scheduled one-week turnaround at its Group I plant in Chennai in April.

In China, PetroChina’s Dalian Petrochemical refinery in Liaoning province, which includes a Group I plant, started a permanent shutdown process in 2023, with the base oils unit shutting down in late 2024. The refinery closure will be completed in June/July 2025 for its relocation. The company plans to clear all product inventories by the end of August, according to reports.

At the same time, there had been expectations that China National Petroleum Corporation (CNPC)/PetroChina’s Fushun plant, also located in Liaoning, would be producing additional Group I base oils that would likely help offset the Dalian closure, market sources said. Fushun has not yet confirmed the Group I volume it will bring online, but earlier estimates had put the Group I bright stock expansion at 60,000 metric tons per year. There were unconfirmed reports that Fushun had started producing additional Group I in late April/early May this year.

Also in China, Sinopec completed a two-month turnaround at its Gaoqiao Group I and Group II plant that started in March.

In Japan, tight Group I conditions persisted after the extended shutdown of an Idemitsu Group I unit in Chiba following a fire at the lubricating oil production facility in mid 2024, but the plant was heard to have been restarted at the end of the year. This plant has been scheduled for a turnaround from May until July. A Cosmo Oil unit in Yokkaichi, Japan, underwent an extended maintenance program which began in September 2024 and was completed at end of the year as well.

Eneos also plans to complete maintenance at its Kainan and Mizushima plants in Japan this year. The Kainan plant will be shut down in May until June. The Mizushima B plant was expected to be shut down in Feb. for an extended turnaround that would last until May. The plant was expected to have been restarted. Later in the year, the Mizushima A unit was scheduled for a one-month turnaround starting in October. All of these shutdowns come on the heels of the permanent closure of two Eneos Group I plants over the last three years.

Another outage that was expected to have some impact on Group I supplies was the ten-day turnaround at the IRPC Group I plant in Thailand, which was completed in May. The producer was heard to have built inventories to cover term commitments during the outage and has begun to offer spot supplies following the restart, according to reports.

Further down the road, it was heard that Thai Lube Base Oil PLC may be shutting down a Group I lube base oil production unit for 45 days, from mid-July until late August.

Recently, the Pertamina Group I plant in Cilacap, Indonesia, underwent maintenance work from mid-January until late February/early March. This had constrained the volumes available for export from the facility in the first quarter.

Within the Group II segment, a number of planned turnarounds and an unplanned run cut may also result in tight supply of certain grades.

South Korean producer GS Caltex was heard to have restarted operations following a 45-day turnaround at its Group II/Group III unit in Yeosu in late Feb. The producer had built inventories to cover term commitments during the outage, but spot supplies remained limited. The plant was heard to have completed the maintenance program in May.

Also in South Korea, Hyundai Oilbank Shell Base Oil had significantly reduced operating rates at its Group II base oil plant in Daesan since March due to a refinery outage which had limited the plant’s feedstock supply. Rates were heard to have been increased in late May.

In China, an unplanned outage at the CNOOC Group II unit in Huizhou impacted availability in the domestic market over the previous three months.

As mentioned above, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and Group II plant that was expected to have been completed in May.

Sinopec was also expected to have shut down its Jinan Group II unit for one month in April.

In India, it was heard that Bharat Petroleum Corp. Ltd. (BPCL) completed maintenance work at its Group II facilities in Mumbai in March. The maintenance program started in late Feb.

Also in India, HPCL was heard to be planning a 45-day turnaround at its Group II trains in May, but this was not confirmed by the producer directly.

In the Middle East, Luberef will be shutting down its Group I and Group II units in Yanbu, Saudi Arabia, for a two-week maintenance program and catalyst change at the end of the first quarter or beginning of the second quarter and was expected to limit spot sales to build inventories ahead of the shutdown. An update regarding the turnaround schedule was not forthcoming.

In the U.S., Chevron shut down its Group II plant in Pascagoula, Mississippi, in April for a four-week turnaround and catalyst change, and had built inventories to cover requirements during the outage, possibly causing some tightening of Group II spot supplies. The plant was heard to have been restarted in late May and additional product should become available in the next few weeks. There was no direct confirmation about the turnaround from the producer.

In the Group III segment, SK Enmove will be completing a partial turnaround at its Ulsan, South Korea, Group III plant for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies – especially of Group II grades – because of uninterrupted production on the facility’s other trains, company sources said.

In the Middle East, Adnoc shut down its Group II/Group III plant in Ruwais, Abu Dhabi, United Arab Emirates, for two to three weeks in early May.

Bapco was heard to have started a two-month turnaround at its Group III facilities in Sitra, Bahrain, in May.

Prices

Crude oil futures surged on Monday as Middle East tensions seemed to intensify with renewed strikes between Israel and Iran, and concerns growing over potential disruptions in the Strait of Hormuz, a crucial oil shipping and bottleneck, which would impact global oil deliveries.

On June 16, Brent August 2025 futures were trading at $74.43 per barrel on the London-based ICE Futures Europe exchange, from $66.38/bbl on June 9.

Dubai front month crude oil (Platts) financial futures for July 2025 settled at $72.74/bbl on the CME on June 13, compared to $65.38/bbl for front-month futures on June 6.

Base oil spot prices were generally stable-to-firm as buyers and sellers assessed their product needs and monitored crude oil pricing. The base oil 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 prices were steady-to-firm. Group I solvent neutral 150 was unchanged at $790/t-$830/t and SN500 was heard at $1,040/t-$1,080/t. Bright stock edged up by $10/t to $1,380/t-$1,420/t, all ex-tank Singapore on snug supplies.

Prices for the Group II 150 neutral were hovering at $820/t-$860/t and 500N was heard at $1,070/t-$1,110/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 held at $660/t-$700/t and SN500 was steady at $920/t-$960/t. Bright stock prices hovered at $1,260/t-$1,300/t FOB Asia.

Group II 150N was unchanged at $680/t-$720/t FOB Asia and 500N was assessed at $940/t-$980/t FOB Asia.

In the Group III segment, the 4 cSt grade was heard at $1,110/t-$1,150/t and 6 cSt held at $1,100/t-$1,140/t. The 8 cSt was steady at $970/t-$1,010/t, all FOB Asia.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com

LNG Publishing Co. Inc./Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.