Similar conditions to those seen during the last weeks of 2025 were anticipated to linger into the first few days of the new year, but suppliers hoped that revived buying appetite would emerge soon as buyers have largely stayed away from trading and inventories were expected to have been depleted. However, demand was likely to remain generally sluggish during the first few weeks, particularly for the heavy grades due to seasonal factors, while supplies were anticipated to be plentiful since most plants were running at optimum rates. Crude oil prices were the wild card, after the surprising armed incursion of the United States into Venezuela and the capture of president Nicolás Maduro over the weekend threw oil markets into turmoil.

Crude oil futures fell on Monday, with analysts assessing the impact of the U.S. intervention in Venezuela on a potential global supply glut amid expectations that Venezuelan output would not change much in the short term. Venezuela has the largest crude oil reserves in the world, yet is only responsible for about 1% of global oil production. OPEC+ members met on Sunday and agreed to maintain their pause on production hikes until April.

Despite geopolitical tensions in Asia and the Middle East and economic uncertainties linked to U.S. tariffs on imports from many different nations, base oil and lubricant demand was expected to improve in the region in 2026, mainly driven by potential growth in markets such as India and Indonesia. Key factors to watch are a growing middle class with increased spending power leading to rising vehicle populations, continued manufacturing expansion and technology-driven needs for high-performance base oils, and infrastructure development. At the same time, environmental pressures and the need for better fuel efficiency and emissions controls could continue to curtail demand for API Group I grades, although consumption from the marine, heavy-duty and industrial segments was expected to remain robust.

Group I

Supply of the heavy Group I base oils was outpacing demand during the last few weeks of 2025 as consumption tends to decline when the temperatures drop. This scenario was expected to persist during the first few weeks of the new year. However, an uptick was likely once blenders start to build inventories for the busy spring production cycle, particularly in key markets such as China. Chinese demand could also be driven by a need to replenish inventories ahead of the Lunar New Year holidays celebrated in mid-February.

Spot availability from Southeast Asia remained plentiful, exerting downward pressure on spot prices. Despite growing Group I availability, bright stock was still relatively tight because global Group I capacity has declined over the last two decades, with several plants shutting down permanently and others being upgraded to produce Group II base oils. Very few new projects have been built to replace this lost Group I capacity, with the exception perhaps of a couple of plants in China, and the fact that the ExxonMobil’s Singapore Resid Upgrade Project in Jurong has brought a Group II extra heavy-viscosity base stock into the market that might replace traditional Group I bright stock in some applications.

The Thai Group I producer who had offered several small cargoes of Group I SN500 and bright stock in December appeared to have skipped offers last week, as it usually communicates prices that are valid until Wednesday of each week. However, many players were already absent from the market, starting on December 31, likely preventing the company from posting fresh offers, according to sources. The latest offer from the producer had been reported at $920 per ton FCA Thailand for the SN500 and at $1,300/t FCA Thailand for bright stock, valid until Dec. 24, for January 2026 shipment, reflecting a $30/t decrease from the previous week’s offers and the general downward trend impacting Group I prices.

It was heard that there had also been some Group I availability from Indonesia, but fresh offer levels were unavailable by the publishing deadline as most players were just returning to their workplaces on Monday.

In China, it may be some time before there is a marked increase in buying appetite for the heavy grades, which continued to be more readily available than the light grades given that most applications require lighter viscosities during the cold winter months. Bright stock prices had been under pressure because of plentiful local availability and mounting imports, although importers had by and large reduced volumes towards the end of the year. Demand was not likely to increase until late January when buyers start to prepare inventories for the spring season and plan for shipments to arrive before the Lunar New Year holidays in mid-February. 

In India, buyers have been absent from trading as they were holding sufficient inventories and had access to domestic products. However, there were expectations of an uptick in buying interest over the next few weeks as stocks have likely been depleted and lubricant demand was anticipated to continue improving given the country’s growing vehicle fleet and expanding industrial output. The question remained whether there would be competitively-priced imports to meet this demand. In the past, there had been Group I imports available from Iran at attractive levels, but this sources has by and large dried up.

Group II

Similar fundamentals to those observed in the Group I segment were present in the Group II category, with the light grades attracting more interest than the heavier cuts both because of seasonal factors and because of a slight tightening of the light viscosities as most producers seemed to have a surplus of the heavy cuts amid healthy production rates, given current refinery economics.

This scenario was evident in China, with the light grades reported as tighter than the heavy cuts and maintaining prices at steady levels. Importers kept values for the light grades firm, while prices for the 500N were revised down. Domestic suppliers also tried to hold off on any price revisions until a clearer picture of demand emerged. 

In India, import prices for the Group II 70N grade and 150N were steady as these grades were less readily available from regional suppliers. Along similar lines, domestic 70N and 150N base oils were in more limited supply and prices were firm, while values for the heavy grades were lowered during the last week of the year. 

A number of transactions involving U.S. Group II cargoes have been concluded, but fewer volumes were expected to be shipped than in years past, largely because of difficulties in making the arbitrage work, high freight rates, and adequate availability of both imports from other origins and domestic products.

In production news, national oil company Indian Oil Corp. was heard to have reached completion of its Group III expansion work at the Haldia refinery in December, although product was not yet commercially available, according to sources. The company also performed a turnaround on its Group II trains in November, but the producer had built inventories to cover contractual requirements during the outage.

Group III

A largely balanced supply and demand scenario supported steady Group III prices, although the 8 cSt was still exposed to downward pressure because of more plentiful availability. Some restrictions to accessibility of 4 cSt supplies from Malaysia during the last few days of 2025 offered support to product from this origin.

In China, buyers continued to enjoy the possibility of acquiring domestic supplies at competitive prices as local producers strove to maintain or gain market share against imports, which had been the only source of Group III cuts until 2018-2020, when domestic Group III production ramped up with the construction of several plants, including a coal-to-liquids unit. This situation was not expected to change any time soon, and in fact, may become even more apparent as additional domestic Group III production is expected to come on stream in the next couple of years. The added base oil capacity is scheduled to come online in 2026-2027, along with increased polyalphaolefin and naphthenic base oils production. That said, many Group III consumers were anticipated to continue buying from their regular foreign suppliers under contract because of approvals and long-term supply relationships.

A similar situation may apply in India, given the prospect of increased domestic production as national oil company Indian Oil Corp. has completed an expansion of its Group III plant in Haldia. The refinery was heard to have shut down in November for maintenance on the existing Group II trains and has started output of Group III cuts, although they have not been commercially available, according to sources. Even after this start-up, there will still be a significant deficit of Group III base oils and imports will have to make up for the significant shortfall in domestic capacity. The Group III segment has the potential to grow steadily in the next few years as the vehicle parc expands in India given a growing middle class, along with expanding industrialization and bourgeoning data centers, which will require more Group III oils for immersion cooling fluids.

For the time being, Group III prices in India were reported as unchanged from a week ago on subdued activity, but trading was anticipated to pick up later this month. 

Most Group III prices were reported within the published ranges in Asia, but at least one producer’s prices carried a premium because of its full approvals and ability to offer global supply from multiple production sites. The producer’s lowest prices for all grades were above the high end of the published FOB Asia ranges. The published ranges may be adjusted in the coming weeks pending further market input.

Shipping

Additional details emerged about recently concluded business, with an 8,000 metric-ton cargo reportedly shipped from Daesan, South Korea, to Kandla, India, between December 22-27 on the Sky Runner. A second 7,000 tons were expected to load in Daesan for Taichung, Taiwan, on Jan. 4-6.

• A 5,000-ton cargo was quoted for shipment from Daesan, South Korea, to Hamriyah, United Arab Emirates (UAE), between Jan. 16-31.
• A 4,000-ton parcel was mentioned for loading in Sriracha, Thailand, to Ras Al  Khaimah, UAE, between Jan. 6-10.
• A 9,000-ton lot was discussed for shipment from the U.S. Gulf to Mumbai and the UAE between Dec. 20 and Jan. 20.
• Approximately 10,000 to 12,000 metric tons were likely to be shipped from Yeosu, South Korea, to Godau, Vietnam, in 1H Jan.
• A 3,600-metric ton cargo was on the table for shipment from Qatar to West Coast India between January 18-20.
• A second cargo of 6,300 tons was also mentioned to cover the same route, with the lifting expected between Jan. 21-22.
• A 4,500-ton lot was likely to be shipped from Mailiao, Taiwan, to Karachi, Pakistan, in early Jan.

Production

A number of turnarounds have already been announced for 2026. The latest information is provided below, along with turnarounds 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

• Luberef scheduled a 45-day turnaround at its plant in Yanbu, Saudi Arabia, from mid-November until December 2025. The unit produces Group I, Group II and Group III base oils. The plant underwent an expansion in 2017. The company had shut down its plants in Yanbu and Jeddah for about a week in Q2 2025.
• 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.
• Eneos’s Mizushima A underwent maintenance from October to November in Japan.
• Two Eneos Group I plants were permanently closed in recent years.
• Chennai Petroleum completed a turnaround at its Group I plant in Chennai, India, in September/October for approximately one month.
• Thai Lube Base Oil’s Group I unit in Sriracha, Thailand, was shut for 45 days from mid-July to second half August.
• PetroChina’s Dalian refinery began a permanent shutdown in 2023. The base oils unit closed in late 2024, with full closure by 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

• ExxonMobil has 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.
• Hyndai Oilbank/Shell plans to shut down its Daesan, South Korea, Group II plant for a routine turnaround that will last a month and a half in early April 2026.
• Formosa Petrochemical postponed a scheduled turnaround and catalyst change at its Mailiao, Taiwan, plant from the fourth quarter of 2025 to third quarter of 2026.
• Hyundai Oilbank Shell Base Oils plans to shut down its plant in Daesan, South Korea, in April 2026 for approximately 45 days. 
• HPCL reportedly conducted a 45-day turnaround at its Group II trains from May until July 2025 in India, following some delays.
• Excel Paralubes completed a scheduled turnaround at its Lake Charles, Louisiana, U.S. plant in October 2025. The plant had been running at reduced rates for most of the year, limiting spot availabilities in the U.S., but a catalyst change has allowed the company to maximize output.
• Motiva restarted operations in June 2025 after a three-week turnaround at its Port Arthur, Texas, U.S., hydrocracker beginning in late May. However, some production issues lingered for several more weeks, reducing the producer’s Group II inventories and tightening Group II spot availability in the second half of 2025.

Group III

• Petronas plans to shut down its Group II/Group III Melaka plant in Malaysia for a turnaround in mid-2026.
• Indian Oil Corp. completed an expansion of its Group III capacity in Haldia and astart-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 should bring more Group III supplies to the market in early 2026.
• A fire at SK-Pertamina’s refinery in Dumai, Indonesia, broke out on October 1, 2025, but was quickly extinguished, with no impact to base oil supply reported. The Dumai Group III base oil plant was shut down for maintenance after the fire and was restarted shortly after. Term supplies were not expected to have been affected. Pertamina also operates a Group I plant in Cilacap, Indonesia. The Dumai refinery is a joint venture between Indonesian state-run Kilang Pertamina Internasional and South Korean producer SK Enmove.
• Sinopec restarted its Group III plant in Yanshan, China, in late July 2025.

Prices

Crude Oil
Crude oil futures traded lower on Monday as investors shrugged off the U.S.-  Venezuela conflict and focused on a potential supply glut, particularly as OPEC+ has not shown any indication that its members intend to cut output. In a meeting on Sunday, OPEC+ members agreed to extend their pause on production increases until at least April.

Saudi Arabia, the world’s biggest oil exporter, was expected to lower the February price for its flagship Arab Light crude for Asian buyers for a third month in a row due to abundant supplies. A Reuters survey of six Asia-based refining sources suggested a potential fall of 10 to 30 cents per barrel, reflecting market dynamics and refining demand in Asia. 

• Brent March 2026 futures were trading at $60.60 per barrel on January 5, 2026, down from $62.09/bbl for front-month futures on Dec. 29 (ICE Futures Europe).
• Dubai crude futures (Platts) for February 2026 settled at $60.18/bbl on Jan. 2, 2026, slightly up from $60/bbl for front-month futures on Dec. 26 (CME).

Base Oils
Spot base oil prices in Asia were notionally steady, with activity largely muted following the year-end holidays. Increased trading was expected over the next few weeks.

The 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
Group I solvent neutral 150 steady at $780/t-$820/t
SN500 unchanged at $920/t-$950/t
Bright stock prices holding at $1,310-$1,350/t 
Group II 150N steady at $820/t-$860/t
500N unchanged at $960/t-$1,000/t

FOB Asia
Group I SN150 steady at $670/t-$710/t
SN500 holding at $720/t-$760/t
Bright stock prices firm at $1,120/t-$1,160/t

Group II 150N stable at $720/t-$760/t
500N unchanged at $780/t-$820/t

Group III grades were largely unchanged:
4 cSt heard at $1,080/t-$1,120/t
6 cSt assessed at $1,050/t-$1,090/t
8 cSt holding at $900/t-$940/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.