Crude oil futures have been catapulted to higher levels on geopolitical tensions and concerns that additional U.S. sanctions on Iranian and Venezuelan crude exports would reduce global supplies, but values slipped from five-week highs on April 1 ahead of U.S. tariff announcements.

Crude oil and feedstock price volatility was just one of several factors that might impact base oil and lubricant demand in the coming weeks. The most influential one was probably the decrease in lubricant demand from the automotive industry – the largest base oil consumer segment – over the last few years given longer drain intervals in newer car models and an increase in sales of hybrid and electric vehicles. There has also been a decrease in commuter driving since the COVID pandemic because many employees continue to work from home. Economic uncertainties and financial struggles have forced numerous small companies and farmers to delay car fleet and equipment oil changes for as long as possible as well.

The latest element that was adding a sense of uncertainty appeared to be the series of tariffs that the United States was expected to implement this week, which could impact not only base oils and lubricants directly, but also automotive imports. The tariffs on automotive imports were likely to increase the price of foreign vehicles, and this might discourage new car sales. Nearly half of all cars sold in the U.S. last year were imported, according to Reuters, which was citing industry data. Mexico, Japan, South Korea, Canada and Germany were the biggest suppliers in 2024. A new 25% U.S. tariff on foreign-made cars is supposed to go into effect on April 3 and be charged in addition to levies already in place. The U.S. currently collects 2.5% on passenger vehicles and 25% on pickup trucks. Trump said that the auto tariffs will apply to all countries and also include automobile parts such as engines, transmissions, powertrains and electrical components.

The threat of additional U.S. tariffs to be implemented this week and the risk of retaliatory tariffs from trading partners was fueling additional uncertainty, dampening consumer and business sentiment and making it more difficult to develop forecasts of product needs.

Meanwhile, base oil buyers were also keeping track of a string of plant turnarounds that were expected to curb spot supply in the U.S. and other regions as well. While the producers have assured customers that they have built ample inventories to cover contract commitments during the outages, spot supplies were likely diminish.

Calumet started a planned shutdown at its Group I and Group II units in Shreveport, Louisiana, in mid March. Company sources said that the turnaround proceeded as planned and production was expected to resume at the end of March. The shutdown had originally been scheduled for the second half of February, but was later postponed due to severe weather conditions.

Chevron was expected to commence a three-to-four-week turnaround at its Pascagoula, Mississippi, Group II plant in April, but was anticipated to have started building inventories to cover contractual obligations during the outage. Market sources said that the company seemed well-prepared on inventory, and that Chevron’s Richmond plant was also running well after its turnaround last October. There was no producer confirmation about the turnaround since the company does not disclose details about its plant operations.

Ergon announced that its paraffinic refinery in Newell, West Virginia, which houses a Group I and Group II base oils unit, has a scheduled a maintenance event beginning March 31. Various operating units of the refinery will be down for approximately seven weeks as the producer implements several reliability improvements. The company also said that no supply interruptions were expected for Ergon’s current ratable customers.

In the second half of the year, Excel Paralubes was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, according to market sources.

In terms of Group I production, with the exception of Calumet’s and Ergon’s planned  turnarounds, most plants were heard to be running well and have scheduled maintenance later in the year. Even so, a heavy Group I turnaround schedule in other regions such as Asia, together with permanent plant closures have tightened global supplies and fueled interest in U.S. availabilities, placing upward pressure on export prices.

Similarly, spot prices for Group III base oils have also moved up because of tightening supplies as several turnarounds will impact spot availability. Domestic producers have curbed Group III output and have increased Group II production, and import volumes have also declined in recent weeks. Several plants are scheduled for turnarounds over the next couple of months, both in the Americas, as well as in Asia and the Middle East.

In Canada, Petro-Canada plans to embark on a 35 -day turnaround at its Group III plant in Mississauga in April. The producer said the shutdown was fully planned for, with contingency inventory built and no impact expected to customers. The Group II unit at the same location will continue to operate.

In South Korea, SK Enmove will be completing a partial turnaround at its Group III plant in Ulsan for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

In the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in late March or early April.

Prices in the Group I segment were generally stable on a balanced-to-tight supply and demand ratio, but spot prices for bright stock have inched up because of limited domestic supplies and emerging buying interest from export destinations. Refinery turnarounds in Asia and recent permanent plant closures in that region and in Europe have resulted in strained global supplies of Group I cuts. Even though U.S. bright stock price levels would allow for arbitrage shipments from these regions, limited availability hampered the conclusion of business. There could be a further tightening of Group I supplies in the U.S. as producers were expected to start building inventories for scheduled turnarounds later in the year.

In the Group II segment, supplies of the light and high viscosity grades have tightened on the back of ongoing and upcoming plant turnarounds, inventory building by a supplier that was preparing for a turnaround later in the year, and steady orders.

The heavy-vis grades both in the Group I and Group II segments may see a slowdown in demand from metalworking applications due to the tariffs imposed on steel and aluminum imports, sources noted. These tariffs could also lead to increases in the price of parts and equipment, raising costs especially during turnarounds.

Within the Group III segment, domestic producers have dialed back production in favor of increased Group II output amid better yields and a narrower spread between the two groups, leading to tighter supplies and stable prices of Group III grades. Sellers were offering attractive values to compete with foreign products, and despite the turnarounds at Group III facilities scheduled in Asia and the Middle East, imports of most grades were expected to be available in the coming months, although the 6 cSt and 8 cSt grades have seen a slight tightening of late. This was partly attributed to additional cargoes being moved to Europe as prices were deemed more profitable compared to the U.S.

Downstream, lubricant manufacturers were still dealing with competition in terms of pricing and found it difficult to offset escalating production costs. Some manufacturers were dealing with climbing prices of imported raw materials and components due to tariffs on Chinese goods, and faced the question of whether to absorb the additional cost or try to pass it on to customers. Given reduced finished products demand amid trade disputes and ongoing economic uncertainties, the consumption upswing typically observed in the spring ahead of the summer driving season was expected to be more tenuous than in previous years.

In terms of base oil exports, there has been healthy buying appetite for U.S. base oil barrels from Mexico. Some suppliers speculated that this was because consumers were hoping to build inventories ahead of potential tariffs on U.S. imports if Mexico retaliated with levies after the implementation of tariffs on Mexican goods. Other participants said that Mexican buyers had held off on purchases and were now rushing to replenish inventories as they expected the domestic U.S. market to become more strained in the spring and summer.

Buying appetite from Brazil was still soft, partly because some consumers had stocked up in the previous months and were able to use up existing stocks. There were also extra barrels available in the Brazilian market that had originally been planned for lubricant production at the Moove plant, but operations there were disrupted by a fire in February, and some of these volumes have been offered up to other buyers.

On the naphthenic base oils front, producers were monitoring crude oil prices and reiterated that the higher values would have to be sustained for some time before suppliers would consider base oil price adjustments.

The light pale oils showed a tight supply and demand ratio which supported stable pricing. The transformer oil sector continued to consume large volumes of the light grades, which have been less available due to a recent plant turnaround and continuous demand from other segments. The producer whose plant had been shut down for maintenance was expected to catch up on additional back orders in March as it continued to fulfill contract requirements. The heavier pale oils were also expected to see heightened demand from the rubber and tire industry as the summer driving season approached. Demand from other segments that see revived activity in the spring such as process oils was also expected to draw on the heavier viscosities.

In the rerefining sector, Pennzoil-Quaker State Company, a subsidiary of Shell plc and Blue Tide, a company developing a network of used motor oil re-refining facilities across North America, announced the completion of Blue Tide’s world-scale re-refining facility in Baytown, Texas. The unit can process 5,000 barrels per day of used oil and produce Group II+ base oils and other products like gas oil and asphalt modifiers. (For more on this, see our article about Blue Tide in week’s Lube Report.)

Crude Oil and Diesel

Crude oil futures slumped on Tuesday, April 1, as markets were on edge ahead of Trump’s additional tariffs rollout on April 2 because a trade war could dampen crude oil demand. Oil futures had steadily climbed during the previous two weeks on geopolitical tensions and potentially strained supply given additional U.S. sanctions on Iranian oil exports and on countries that import Venezuelan crude.

On April 1, West Texas Intermediate May 2025 futures settled on the Nymex at $71.20 per barrel, compared to $69/bbl on March 25.

Brent futures for June 2025 delivery were trading on the ICE at $74.42/bbl on April 1, from $73.66/bbl for front-month futures on March 25.

Louisiana Light Sweet crude wholesale spot prices were hovering at $74.37/bbl on March 31, from $71.51/bbl on March 24, according to the U.S. Energy Information Administration.

Low sulfur diesel wholesale spot prices were at $2.31 per gallon at New York Harbor, $2.26/gal on the Gulf Coast and $2.39/gal in Los Angeles on March 31, compared to $2.27/gal, $2.21/gal and $2.31/gal, respectively, on March 24, according to the EIA.

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

Posted Paraffinic Base Oil Prices: April 2, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.
Archived base oil price reports can be found here.
Historic and current base oil pricing data are available for purchase in Excel format.

*ExxonMobil prices obtained indirectly.
**Rerefiner

Posted Paraffinic Base Oil Prices: April 2, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.
Archived base oil price reports can be found here.
Historic and current base oil pricing data are available for purchase in Excel format.