The ongoing trade war with China and the exorbitant reciprocal tariffs that both countries intend to collect were likely to impact product prices in the U.S. as many manufacturers import raw materials and components from China. President Trump pushed up the tariffs on Chinese goods to 125%, raising them effectively to 145% after the application of levies imposed earlier this year. Chinese President Xi Jinping hit back, hiking duties on U.S. goods entering China to 125%. Market observers said that petrochemical producers in general will likely be affected by the tariffs, even though many products were expected to be exempt, including energy products, polymers, phenols, ethylene and some pharmaceuticals. But it was not yet clear what products would be subject to tariffs, and which ones would be excluded – for example, there was concern about tariffs on additives as these would directly impact finished lubricant prices.

Crude oil prices were also affected by the tariff turmoil as analysts worried that the trade barriers would dampen global economic activity and lead to reduced fuel consumption, with futures consequently plummeting to multi-year lows last week. Prices inched up early this week after the U.S. announced some exclusions to the tariffs and data showed a rebound in Chinese crude imports in March, but slipped again after the International Energy Agency  downgraded its oil demand forecast for 2025 and 2026.

Tightening base oil supplies on the back of steady demand and plant turnarounds had nudged spot prices up in the previous month, but softer conditions in the domestic market have started to exert pressure on spot indications, with some API Group II grades edging down by a few cents per gallon.

Export prices appeared to be holding their ground given regional scarcity of a few base oils, particularly of Group I cuts such as the heavy grades and bright stock. Given a lack of surplus of some grades, some of the U.S. cargoes that were available did not seem to be substantial enough for transatlantic shipments, however.

There had also been an uptick in buying interest from Mexican buyers in the previous few weeks as they strove to build inventories ahead of potential tariffs, although demand in Mexico appeared to be less robust than expected for this time of the year given economic uncertainties.

Buying appetite from Brazil remained lackluster. Plentiful availability of domestic Group I base oils and a weaker local currency against the U.S. dollar dampened import activity. The market was also absorbing some surplus material that became available following a fire at Moove’s lubricant plant in Rio de Janeiro as the producer had been forced to halt operations. Several cargoes were reportedly shipped from Port Arthur, Texas, to Brazil in March, and there were expectations that buyers would be looking for replenishment barrels in May.

Meanwhile, current and upcoming plant turnarounds have resulted in a tighter supply and demand balance for some Group I and Group II grades in the U.S.

Sources said that Group I/Group II producer Calumet was rebuilding stocks following a turnaround in March, while a second producer, Ergon, has shut down its Group I/Group II base oil unit for approximately seven weeks as the producer implements several reliability improvements. The company said that no supply interruptions were expected for current ratable customers.

Chevron started a three-to-four-week turnaround at its Pascagoula, Mississippi, Group II plant this month and had been anticipated to build 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.

Excel Paralubes was also heard to be preparing inventories as it was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, in the second half of the year. The plant has been running at reduced rates, according to market sources.

Group II supplies had been snug for some time given preparations for the turnarounds and the actual shutdowns, but seem to have lengthened somewhat due to lackluster demand, particularly in the case of the mid-viscosity cuts. Sellers were not just restricting orders to contract stipulations, but appeared to have spot availability as well. The 200-230N and 600N cuts were more readily available than the other Group II grades. Buyers also had the option of acquiring rerefined products, as rerefining plants were running well following a number of brief turnarounds earlier this year.

A similar situation was observed in the Group III segment, where spot supplies have started to grow given reduced demand from downstream applications, particularly from the PCMO segment as disruptions brought about by tariffs have affected supply chains and automotive production rates, partly curtailing consumption of factory-fill lubricants and greases.

Group III imports from various origins in Asia, the Middle East and Canada continue to be regularly shipped to the U.S. and were expected to be exempt from steeper import duties as they fall under the energy commodities category. The plentiful supplies were also exerting pressure on spot pricing.

On the naphthenics base oils front, balanced-to-tight fundamentals continued to prop up values, with suppliers noting that there were no strong factors pushing prices in one specific direction. Downward pressure from lower crude oil and feedstock prices was offset by the current supply and demand balance and snug conditions in the light-viscosity oils segment in particular.

Downstream, lubricant blenders kept an anxious eye on tariff developments, as additive imports from several different origins might be subject to increased tariffs, driving production costs up. Manufacturers’ profits have already been squeezed by climbing base oil prices earlier in the year amid competition with other blenders, which drove many to adjust prices down to protect market share.

Crude Oil and Diesel

Crude oil futures fell on Wednesday morning, extending losses from the previous day as muddled tariff policies in the U.S. triggered uncertainties in terms of global economic growth and future energy demand. Futures also declined after the IEA changed its forecast for 2025 and 2026 on expectations of reduced demand.

On April 15, West Texas Intermediate May 2025 futures settled on the Nymex at $61.33 per barrel, compared to $59.58/bbl on April 8 and substantially down from $71.20/bbl on April 1.

Brent futures for June 2025 delivery were trading on the ICE at $64.36/bbl on April 15, from $60.19/bbl on April 8 and $74.42/bbl on April 1.

Louisiana Light Sweet crude wholesale spot prices were hovering at $64.22/bbl on April 14, compared to $63.40/bbl on April 7 and $74.37/bbl on March 31, according to the U.S. Energy Information Administration.

Low sulfur diesel wholesale spot prices were at $2.10 per gallon at New York Harbor, $2.02/gal on the Gulf Coast and $2.22/gal in Los Angeles on April 7, compared to $2.08/gal, $2.03/gal and $2.19/gal, respectively, on April 7, according to the EIA.

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

Posted Paraffinic Base Oil Prices: April 16, 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.
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*ExxonMobil prices obtained indirectly.
**Rerefiner