Base Oil Supply Tightens During Turnarounds, Buyers Eye Price Changes: LubesNGreases

Key Highlights

• Base oil prices remain firm, with Group I SN150 at $790–830/t and SN500 at $1,030–1,070/t.
• Supply disruptions persist, with maintenance shutdowns at major refineries in India, China, Indonesia, and South Korea.
• India’s oil imports shift, with a 67% rise in U.S. crude purchases while Russian flows remain strong.
• Potential tariff risks loom, as U.S. sanctions on Russian oil could raise India’s costs by $3–6 per barrel.

Base Oil Prices Firm Despite Weak Trading & Supply Constraints

• As per the Lubesngreases, Base oil prices have remained largely stable to firm, despite subdued trading activity and tight supplies for certain grades. Spot base oil prices in Asia showed some upward momentum due to constrained availability, particularly for Group I solvent neutral (SN) grades and bright stock. 
• For instance, Group I solvent neutral 150 was assessed at $790/t-830/t, while SN500 hovered between $1,030/t-1,070/t, according to Ex-tank Singapore prices. The prices for bright stock stood at $1,360/t-1,400/t, which reflects ongoing supply challenges.
• For Group II, 150N prices were stable at $840/t-880/t, and the 500N held steady at $1,070/t-1,110/t. Group III 4 cSt saw a slight increase, up by $10/t to $1,050/t-1,090/t.
• In addition to these spot prices, FOB Asia figures for Group I SN150 ranged from $660/t-700/t, with SN500 at $900/t-940/t, while bright stock remained steady at $1,220/t-1,260/t. 
• Group II 150N and 500N were largely steady at $720-760/t and $970/t-1,010/t, respectively. Group III 6 cSt and 8 cSt also showed minimal price fluctuations, with the former priced between $1,060/t-1,100/t and the latter at $950/t-990/t.

Supply Chain Disruptions: Global Refinery Shutdowns Tighten Base Oil Markets

• The demand-supply balance for base oils remains under pressure due to various ongoing plant turnarounds, unplanned outages, and tightening availability across Groups I, II, and III. 
• On the supply side, several refineries and base oil production units globally are undergoing maintenance, exacerbating supply constraints. 
• This includes key producers such as Pertamina in Indonesia, GS Caltex in South Korea, and Hindustan Petroleum Corp. Ltd. in India. 
• Additionally, PetroChina’s Dalian Petrochemical Group I plant in China is expected to be permanently shut down in 2024, further limiting supply options for Group I base oils.
• On the demand side, base oil consumers have exhibited caution in purchasing activities, influenced by a mix of economic uncertainties, the potential impact of tariffs on international trade, and volatile crude oil prices. 
• The situation is compounded by the lackluster demand in downstream applications, particularly from sectors like agriculture, construction, and transportation, which has affected base oil consumption in several regions.
• Despite this, there is sustained demand for certain grades such as Group I bright stock, which continues to be sought after in markets like China, where availability is tight. 
• However, buyers increasingly resist accepting higher prices, creating a stalemate in the market. Supply chain disruptions and tighter inventories are expected to keep prices elevated, but more stable conditions are anticipated as planned maintenance work concludes.

India’s Oil Imports Surge as U.S. and Russian Supply Dynamics Shift

• India’s oil imports from the U.S. surged 67% in March, reaching 244,000 barrels per day, as refiners diversified supplies amid geopolitical shifts. 
• Despite Trump’s threat of 26% tariffs on Indian goods and potential sanctions on Russian oil, India’s Russian crude imports still rose 11%, with total imports hitting a 15-year high of 5 million barrels per day. 
• Analysts note that U.S. tariffs on Russian oil could inflate India’s import costs by $3–6 per barrel, but ICICI Securities suggests the impact on India’s oil sector may be limited given alternative supply options.  
• Meanwhile, India is accelerating energy diplomacy, balancing affordable Russian crude with increased U.S. purchases. 
• Experts warn that Trump’s proposed tariffs could disrupt global oil markets, risking inflation if Russian supplies shrink. Separately, India is advancing infrastructure projects like an underwater train to Dubai (cutting travel time to under 3 hours) to boost trade connectivity.  

Key Updates:  

1. U.S. oil imports are up 67%, and Russian flows remain steady despite tariff threats.  
2. Refiners exploring alternatives (Middle East, North Sea) to mitigate tariff risks.  
3. Geopolitical tightrope: India prioritizes cost-effective crude while navigating U.S. pressure. 

Expert Opinion: Geopolitical Risks & Economic Uncertainty Shape Future Trends

• The outlook for the base oil market is shaped by several factors, with geopolitical tensions, economic uncertainties, and supply chain disruptions driving price volatility. In particular, the imposition of U.S. tariffs on automotive imports is expected to impact demand for automotive lubricants, which could, in turn, influence base oil consumption. Further economic uncertainties, such as concerns about a global recession due to trade disputes, will also weigh on the market.
• Looking ahead, while price pressure is expected to remain on specific grades due to ongoing supply constraints, demand growth may stabilize once the economic environment stabilizes and the completion of maintenance work alleviates supply issues. However, any unexpected disruptions in crude oil prices or international trade policies could introduce additional uncertainty to the market.