The change in crude oil price direction after several weeks of downward adjustments had started to exert upward pressure on base oils, although crude spikes do not typically translate into base oil increases overnight. Rather, the reasons behind the price jump triggered worries about oil supplies and the possibility that the Israel-Iran conflict could affect cargo shipments moving in and out of the Middle East. Market players said that they had planned several shipping operations and were waiting to hear whether the cargoes would be able to leave port and travel safely on the usual shipping routes. Airlines have already changed their flight paths in order to avoid flying over the territories where the missile attacks were taking place. The geopolitical tensions have also pushed up additional war risk insurance premiums up, leading to steeper freight rates.

Meanwhile, the tariff disputes between president Trump and several nations, including China, seemed to have been put on the backburner, as most attention centered on the conflict in the Middle East.

Group I

Tight conditions continued to reign in the API Group I segment, although slowing demand in some countries offset some of the supply and demand imbalance. The snug fundamentals have been part of the Group I landscape for many months as they are the result of recent and ongoing turnarounds and permanent plant shutdowns at key origins such as Southeast Asia, Japan and the Middle East.

Within the Group I category, bright stock continued to show the tightest fundamentals due to plant closures in the region, while demand from the industrial, heavy duty and marine applications has not fallen significantly, despite a slowdown in economic activities in China and India. In China, the more muted demandwas the result of curbed manufacturing output and reduced exports due to China’s trade war with the U.S.

In India, the start of the monsoon season dampened activity in some segments because the heavy rains cause disruptions in transportation, logistics and agricultural activities. Buyers were trying to meet base oil demand by using up existing stocks and securing term volumes from domestic producers.

Requirements from the marine segment in Asia have also weakened on reduced shipping activity due to the tariff upheaval and could see additional impacts from the current Israel-Iran conflict.

The snug Group I conditions were generally expected to start easing as some plants in Southeast Asia have restarted and more spot cargoes were expected to become available in the coming weeks.

There were also expectations that additional Group I capacity would be introduced in Asia as an expansion at PetroChina’s Fushun plant would be coming on stream this month. But the current sluggish conditions in many lubricant segments in China have dampened buying interest for base oils. Importers have cut back on imports as demand levels were difficult to predict and there was ongoing price competition with local producers.

Later in the year, ExxonMobil was expected to introduce a new heavy-viscosity Group II base stock with similar characteristics to bright stock at its Singapore Resid Upgrade Project. The company has achieved mechanical completion of the project and was expected to bring the added capacity online some time in the second half of the year. Although it would be produced in Singapore, the heavy-vis grade was expected to have worldwide availability.

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.

Aside from the general market tightness of Group I grades, India was impacted by the conflict in Iran, where some Group I cargoes moving to India originate and are typically shipped through a third Middle East country. There were expectations that the conflict would restrict availability of Group I base oils from the Middle East amid rising freight costs. The ongoing tight conditions were heard to have lifted Group I CFR India import prices by $5-$10 per metric ton compared to the previous week.

While Group I production from domestic producers has increased in India, it is still not sufficient to meet all requirements.

To make matters worse, a Thai producer was understood to be building inventories ahead of a shutdown scheduled to start in July, and there were fewer spot volumes on offer from Thailand as well.

Group II

The downward price pressure observed in the Group II segment due to lengthening availability was partly reversed by climbing crude oil and feedstock prices, together with a demand uptick in the Middle East.

In China, buying interest for imports has subsided because of sluggish conditions in downstream lubricant segments and more plentiful availability of Group II grades given additional capacity coming on stream in China over the last ten years. In fact, several plants were heard to be running at reduced rates because of oversupply conditions. Domestic product was being offered at competitive prices and availability seemed ample, reducing the country’s dependence on imports.

In India, snug availability of the light Group II grades pushed prices to higher ground. Group II CFR India import prices for the 70N and the 150N base oils edged up because of climbing crude oil and gasoil prices, while the 500N was more stable on more subdued demand. Buyers were understood to be resisting the higher price levels.

Additional July offers of Group II grades of South Korean origin have surfaced in India, although availability of the light-viscosity grade was less abundant, buoying prices. A supplier seemed to have slight oversupply of the heavy grades and offered competitive pricing. South Korean producers were also considering fresh opportunities in the Middle East, which could divert cargoes away from India, but could also be affected by transportation issues due to the Israel-Iran conflict.

There was little fresh news about U.S. Group II cargoes moving to India, likely because of steep prices and Group II supplies still deemed on the tight side in the U.S. following plant turnarounds and inventory building ahead of the hurricane season along the U.S. Gulf Coast.

Group III

Group III prices were stable-to-firm because of ongoing tightness and higher values in other regions, which was attracting cargoes away from Asia and the U.S. During the ICIS conference in Singapore last week, an ICIS analyst said that it was the first time that Asian supplies were more likely to move to Europe than to the U.S. because of more attractive pricing in that region. A snug supply situation in Europe was partly to blame for the steep values.

The 4 cSt grade saw upward price adjustments given strong buying interest against more limited supplies than the 6 cSt and 8 cSt cuts.

Buying appetite from China has weakened because of a seasonal slowdown, reduced demand for motor oil from the automotive industry on economic uncertainties and reduced ICE car sales and high demand for electric vehicles.

Domestic Group III producers continued to offer lower prices than imports to maintain or gain market share.

In India, Group III prices were reported as largely stable, as demand from the automotive, logistics and transportation segments was expected to be dampened by the heavy monsoon rains and reduced passenger car and two-wheeler sales. Most requirements are being met through term volumes, according to sources. Offers from a Middle East producer have been absent due to a turnaround at its facilities that was completed this month, but it was expected to start offering spot cargoes once it rebuilds inventories.

Shipping

There were few inquiries being discussed, possibly due to concerns about potential shipping disruptions caused by the conflict in the Middle East. A 3,000-4,000-metric ton cargo was mentioned for shipment from Taiwan to West Coast India and/or the Gulf in late June or July. A 5,000-8,000-ton cargo was on the table for shipment from Ruwais, United Arab Emirates, to Mumbai, India, at the end of June as well. A 1,450-ton lot was expected to be shipped from Onsan, South Korea, to Singapore at the end of June. Two cargoes of about 1,000 tons each were discussed for shipment from Onsan to Bangkok, Thailand, in mid-July. A 2,000-ton parcel was quoted for shipment from Yeosu, South Korea, to Nantong, China, between July 1 and 10. A 2,700-ton cargo was expected to be lifted from Malaysia to Antwerp, Belgium, between June 26-29.

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. was expected to restart its Group I unit in late April/early May after a partial turnaround that started in late Feb. The company 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. 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/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.

Earlier this year, 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. completed maintenance work at its Group II facilities in Mumbai in March. The maintenance program started in late February.

Also in India, Hindustan Petroleum 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 reportedly shut down its Group I and Group II units in Yanbu, Saudi Arabia, for a two-week maintenance program and catalyst change in the second quarter, limiting spot sales from the producer ahead and after the turnaround.

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 and was heard to have restarted operations.

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

Prices

Crude oil futures surged on Monday as Middle East tensions intensified over the weekend, with renewed missile strikes between Israel and Iran and the U.S. getting involved in the conflict by hitting three Iranian nuclear facilities on June 21. Concerns grew over the potential closing of the Strait of Hormuz – a crucial oil shipping route that partly borders Iran – which would impact global oil deliveries. The Strait lies between the Persian Gulf and the Gulf of Oman, with Oman and the United Arab Emirates bordering its southern side.

On June 23, Brent August 2025 futures were trading at $78.22 per barrel on the London-based ICE Futures Europe exchange, from $74.43/bbl on June 16.

Dubai front month crude oil (Platts) financial futures for July 2025 settled at $75.16/bbl on the CME on June 20, compared to $72.74/bbl for front-month futures on June 13.

Base oil spot prices were generally stable to firm as buyers and sellers awaited more news on geopolitical developments 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 hovered at $790-$830/t, but SN500 inched up by $10/t to $1,050/t-$1,090/t. Bright stock prices remained firm at $1,380/t-$1,420/t, all ex-tank Singapore on snug supplies.

Prices for Group II 150 neutral edged up by $10/t to $830/t-$870/t and 500N was also up by $10/t at $1,080/t-$1,120/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed up by $10/t at $670/t-$710/t, but SN500 was steady at $920/t-$960/t. Bright stock prices hovered at $1,260-$1,300/t FOB Asia.

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

In the Group III segment, the 4 cSt grade edged up by $10/t to $1,120/t-$1,160/t, and the 6 cSt was holding 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.