Asian Base Oil Market Cools Amid Monsoon Slowdown, Tariff Uncertainty, and Gradual Plant Restarts

Key Takeaways

• Crude Oil Strengthens Slightly: Brent futures rose to $65.03/bbl, showing mild bullishness driven by global supply-side caution.
• Base Oil Prices Mostly Stable: Group I SN500 and Group II 500N softened slightly; most other grades remained flat week-on-week.
• India Demand Slows: Monsoon season and preference for local supply are reducing import volumes and pushing price negotiations lower.
• Group III Remains Tight: Strong European demand and ongoing maintenance in South Korea and the Middle East are limiting availability.
• Trade Tensions Return: Reinstated U.S. tariffs and China’s marine sector slowdown are weighing on Group I export demand and sentiment.

Oil Market Price

1. Crude Oil: Brent August 2025 Futures: $65.03/bbl (↑ from $64.78/bbl on May 26)
2. Ex-Tank Singapore (Spot Prices): Group I SN150: $790–$830/ton (Steady), Group I SN500: $1,020–$1,060/ton (↓ $10/ton), Group II 150N: $820–$860/ton (Stable), Group II 500N: $1,070–$1,110/ton (Stable)
3. FOB Asia Prices: Group I SN150: $660–$700/ton (Stable), Group I SN500: $920–$960/ton (Stable), Group II 150N: $680–$720/ton (Stable), Group II 500N: $940–$980/ton (↓ $10/ton)
4. Group III FOB Asia: 4 cSt: $1,090–$1,130/ton (Stable), 6 cSt: $1,100–$1,140/ton (Stable), 8 cSt: $970–$1,010/ton (Stable)

Oil Demand and Supply Dynamics: Monsoon Slows Demand

• As per LubesNGreases.com, the Asian base oil market remains tight, with strong demand in India and Southeast Asia, particularly for bright stock. However, the onset of monsoons has led to deferred purchases and downward price negotiations. 
• Heavy grades are under pressure from soft demand and oversupply in India and China, while lighter grades like 150N maintain steadier demand. China favours domestic Group II supplies due to lower costs and easier logistics. South Korea and Singapore continue supplying the region, though production is partially constrained.
• Group III 4 cSt and 6 cSt grades remain tight due to ongoing maintenance in South Korea and the Middle East. While China and India show muted demand, strong European interest is driving Asian buyers to increase their bids.
• Multiple shipments from South Korea, U.S. Gulf, and Indonesia point to balanced regional flows, though India’s import demand has softened due to monsoon and preference for local sources.

Oil Market News: Trade Tensions Impact

• Tariff Uncertainty: The U.S. Court of International Trade initially blocked Trump-era tariffs but a federal appeals court reinstated them, contributing to demand uncertainty across Asia, particularly China.
• China Trade War Impact: A slowdown in industrial and marine sectors has reduced demand for Group I grades, particularly as exports and vessel movement decline.
• Refinery Statuses:
  1. China: Fushun may offset the Dalian closure with bright stock capacity (60,000 TPA).
  2. India: Hindustan Petroleum, Chennai Petroleum, and BPCL have completed or planned shutdowns.
  3. Middle East: Luberef (Saudi Arabia) and ADNOC (UAE) undergoing maintenance.
  4. U.S.: Chevron completed a catalyst change and resumed operations.

Market Expectation: Stable Prices, Slow Demand, Tight Supply

• Prices are likely to stay stable or slightly soft, especially for Group II heavy cuts and Group I SN500, amid seasonal demand dips and growing inventories. India’s demand will stay subdued due to monsoons, favouring local producers. 
• Future supply may tighten if maintenance schedules overlap with the U.S. hurricane season. U.S.-China trade tensions could worsen demand and disrupt trade flows. The market also remains exposed to risks from logistics disruptions, oil price volatility, and broader economic pressures like inflation and interest rates.