U.S. Base Oil Price Report


A majority of base oil suppliers implemented posted price increases over the past couple of weeks, with Motiva and Safety-Kleen completing the round this week as both suppliers communicated markups as well. On the naphthenic side, a number of producers also raised prices by similar amounts.

Motiva will lift the price of its API Group II Prima 100 grade by 40 cents per gallon, its Prima 220 and 600 by 50 cents/gal, and its Group III base oils by 55 cents/gal, with an effective date of April 1.

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Safety-Kleen will increase its Group II+ posted prices by 40 cents/gal on its 120-vis grade and 50 cents/gal on its 220/240-vis grade, effective March 31. 

The balance of base oil producers implemented increases ranging from 20 to 40 cents per gallon, with their implementation dates interspersed between March 19 and March 29.

The initiatives were said to have been fueled by critically low supply levels, firm feedstock and crude oil values at the time of the announcements, and skyrocketing spot prices.

Posted prices are typically one of the elements that suppliers and buyers incorporate into the basket of prices that term contract negotiations are based on. There is also usually a discount granted on the posted price, depending on the supply and demand situation at the time the contract is drawn. A majority of United States buyers secure base oil supply through contracts.

Spot prices are more volatile and can change rapidly when there is a significant imbalance between supply and demand, which is the case in the current scenario. Given the fact that producers have very little extra material to offer for spot transactions, after meeting all their contract commitments, spot prices have moved up steadily over the last several months.

Moreover, two major Group I and II base oil producers – ExxonMobil and Motiva – remain on force majeure and their customers still on allocation, following unexpected output disruptions during a winter storm in February.

Motiva was hoping to lift its allocation around April 15, sources said. Motiva’s base oil units were running well, but customers may be experiencing some shipment delays while the producer catches up with a backlog of orders, the sources added.

ExxonMobil has also restarted its base oil units in Texas, but there were no further details available as to when the producer would be lifting its force majeure.

This leaves only a few producers who are able to offer spot supplies, but most of them have minimal amounts to sell at the moment, also limiting spot export movements to destinations such as Mexico, India and Brazil, among others.

A couple of base oil plants that were undergoing turnarounds at the time of the storm also suffered setbacks and had remained shut down almost a month longer than originally anticipated, straining domestic supply of Group I and II grades even more. Despite the fact that these plants were heard to have restarted, supply “was limited at best,” a source noted.

One of these producers, Calumet, resumed production at its Group I and Group II unit in Shreveport, Louisiana, last week. HollyFrontier’s Group I plant in Tulsa, Oklahoma, was also restarted late last week, following a routine turnaround, and was expected to produce base stocks later this week, according to sources.

A number of other plants, both on the paraffinic and naphthenic side, also shut down briefly during the storm, but most had been able to restart operations, sources said.

The naphthenic base oils segment was also experiencing tight supply fundamentals and a steady rise in the cost of feedstocks and transportation. As a result, both Cross Oil and Calumet lifted the price of their naphthenic base oils by 20 cents/gal on March 23. Two other producers were heard to be monitoring conditions and had not announced any adjustments at the time of writing.

Cross Oil was also heard to have completed a turnaround at its naphthenic base oil plant in Smackover, Arkansas, which began on Feb. 25.

Valero had temporarily shut down operations at its Three Rivers, Texas, plant due to the freezing temperatures and utility supply disruptions in mid-February, but sources said that the plant was expected to be restarted on Monday or Tuesday this week.

San Joaquin Refining completed a turnaround at its naphthenic base oil unit in Bakersfield, California, in late February and had placed customers on allocation during the shutdown.

Participants have also been keeping an eye on the container ship that had ran aground in the Suez Canal nearly a week ago, blocking the traffic of cargo vessels on the crucial waterway and of oil tankers in particular, which caused crude prices to jump. However, prices weakened when the vessel was freed on Monday, and passage through the waterway was expected to resume.

Crude oil futures were trading higher than last week as traders expected shipping delays to persist, even after the container ship was able to move, but there were uncertainties surrounding OPEC+’s meeting on April 1 and whether the organization would extend its supply cuts.

On Tuesday, March 30, May WTI futures settled at $60.55 per barrel on the CME/Nymex, and had closed at $57.76/bbl on March 23.

Brent futures for May delivery settled at $64.14/bbl on the CME on March 30, from $60.79/bbl on March 23.

Light Louisiana Sweet crude wholesale spot prices were hovering at $63.64/bbl on March 29 and had closed at $63.53/bbl on March 22, according to the Energy Information Administration.

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

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.

Historic and current base oil pricing data are available for purchase in Excel format.

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