Lubricants Market Morning Report 20260520

Market Brief (Formal English for Official Website)

I. Global Market Updates

May 19 Closing Prices: WTI down 0.82% at $107.77, Brent down 0.73% at $111.28

International crude futures edged lower at settlement on May 19. June WTI crude slipped 0.82% to $107.77 per barrel, and July Brent crude fell 0.73% to $111.28 per barrel.

The previous session saw Brent surge to an intraday high of $112 per barrel (the highest since May 5) following a drone attack on a nuclear power plant in the UAE, before pulling back late in the trading day.

May 20 Asian Session: WTI and Brent jump 2% intraday, WTI at $108.41

During May 20 Asian trading hours, WTI crude climbed over 2% to $108.41 per barrel, while Brent rose 2% to $108.27 per barrel due to contract rollover spreads.

Citigroup forecasts Brent will rally to $120 per barrel in the near term, with a bullish extreme scenario of $150; however, its midpoint forecast for mid-2027 stands at only $80–90 per barrel.

Citi Research: Brent seen at $120 near-term, peak bull case $150

In a research note released May 20, Citi projected Brent crude will rise to $120 per barrel in the short run, potentially hitting $150 under an extreme bullish scenario. The oil outlook for 2027 remains highly uncertain, with a baseline price range of $80–90 per barrel. The timeline for restored full shipping in the Strait of Hormuz remains the core price driver.

Domestic fuel price adjustment on May 21 turns from cut to hike, RMB 30–150/ton increase expected

Sustained rallies in international crude flipped the crude oil price change rate from negative to positive at 0.71%, with gasoline and diesel set to rise by RMB 30 per ton. Analysts warn the hike could widen to RMB 150 per ton (roughly RMB 0.13 per liter) if global oil prices keep climbing in the final two days ahead of the adjustment window on May 21.

Nearly 80 nations take emergency action; summer fuel demand peak ushers in high-risk energy crisis phase

Traders warn oil prices face another steep rally unless transit through the Strait of Hormuz fully resumes. Roughly 30% of globally seaborne crude flows through the waterway, equivalent to 21 million barrels daily. Close to 80 countries have rushed to secure alternative supply sources. With the Northern Hemisphere summer fuel consumption peak approaching, supply deficits are poised to expand further.

II. Lubricant Industry News

Cinda-linked entities to transfer controlling stake in Uni Lubricants; stock hits 10% daily limit to close at RMB 19.98

After market close on May 18, Uni Lubricants (600506.SH) issued an announcement stating its controlling shareholder Shenzhen Construction Investment and concerted party China Cinda plan to publicly solicit transferees for a combined 28.09% equity stake.

Boosted by positive restructuring sentiment, the stock opened at the 10% daily limit on May 19 and closed at RMB 19.98 per share with buy orders totaling 56,800 lots. Uni Lubricants has expanded into liquid cooling businesses in recent years, and the ownership shift may reshape industry competition dynamics.

Shell Q1 adjusted net profit hits USD 6.9 billion, doubling quarter-on-quarter; lubricant brands raise prices by 5%-10%

Shell’s adjusted Q1 2026 net profit reached USD 6.9 billion, nearly doubling from Q4’s USD 3.3 billion. Driven by broad price hikes for crude, base oils, additives and packaging materials, major brands including Mobil, Shell, Castrol, Uni Lubricants and Great Wall implemented 5%–10% price hikes sequentially.

New API SQ / ILSAC GF-7A standard implemented; Uni Taiheneng completes dual certification upgrade first

The 2026 API SQ / ILSAC GF-7A standard has officially taken effect, imposing stricter requirements on fuel efficiency and emission reduction performance. Uni Lubricants’ Taiheneng product line became the first to complete dual certification upgrades, while Kunlun Tianrun plans to roll out API SQ-compliant formulations across its full product portfolio. The new standard has become a core direction for industrial upgrading.

III. South American Market

Latin American oil output projected at 8.8 million bpd in 2026, emerging as a new global oil & gas growth hub

According to Rystad Energy reports, Latin American crude output is expected to exceed 8.8 million barrels per day in 2026 and is poised to become a vital non-OPEC supply source by 2030. Mexico has agreed to export crude to Japan to ease supply tightness stemming from Iran geopolitical tensions.

Ecuador’s state oil firm launches crude hedging program covering 30 million barrels

Ecuadorian state oil company launched a crude hedging program covering over 30 million barrels (accounting for 40%–50% of its total export volumes to be sold before December 2026). The program aims to hedge against revenue losses caused by price declines and stabilize national fiscal income.

IV. African Market

Nigeria’s exports of four core crude grades projected at 827,000 bpd in June, up 20,000 bpd month-on-month

Preliminary loading schedules show Nigeria’s four primary crude blends will average 827,000 barrels per day for June exports, up from 807,000 bpd in May.

Following the expiry of Russian oil sanctions waivers, India has ramped up purchases of African crude, with Angola, Gabon and Ghana emerging as alternative suppliers; however, African volumes still account for a tiny share of India’s total crude imports in the short term.

V. Russian Market

Russian oil sanctions waiver expired May 16 without renewal; India’s daily 2.3 million bpd Russian imports face full sanction risks

U.S. temporary sanctions exemptions for seaborne Russian crude expired on May 16 and were not extended. India imports 2.3 million barrels of Russian oil daily, making up 50% of its total crude intake. Future purchases will face the threat of U.S. secondary sanctions, which may block bank settlements, marine insurance and USD payment channels. Indian authorities stated the country will continue buying Russian oil regardless of waiver status.

India rapidly signs energy deal with UAE to secure alternative crude supplies

Shortly after the waiver expiry, India sealed an energy cooperation agreement with the UAE on May 15 to accelerate procurement of alternative Middle Eastern crude. Nevertheless, Middle Eastern oil shipments remain severely restricted by Strait of Hormuz blockades. Vehicle queues at gas stations stretch over 3 kilometers nationwide, edible oil and fertilizer prices have skyrocketed, and municipal power outages have intensified.

VI. South Asian Market

India’s livelihood crisis: 3-kilometer queues at gas stations, edible oil and fertilizer prices surge

The cut-off of Russian crude supplies has directly impacted India’s 1.4 billion population: lengthy queues stretching 3 kilometers form at filling stations, edible oil prices spike, spring farming faces fertilizer shortages, and urban power rationing worsens.

India’s strategic petroleum reserves only cover 9.5 days of consumption (the IEA recommends a 90-day reserve buffer), laying bare structural flaws in its energy security. Importing Russian crude has saved India over USD 40 billion in foreign exchange reserves cumulatively.

VII. Malaysian Market (Marine Lubricants)

Malaysia cracks down on diesel smuggling; 800,000 liters seized, assets worth RM 2.33 billion impounded

In April, maritime law enforcement in Penang, Malaysia intercepted two tankers suspected of illegal diesel transfers. Authorities seized approximately 800,000 liters of fuel, impounded assets valued at RM 2.33 billion (roughly USD 589 million), and arrested 22 crew members.

Regulatory oversight over Southeast Asia’s bunker fuel market has tightened, which is expected to boost demand for compliant marine lubricants.

VIII. Lubricant Popular Science (For Customer Reference)

What are API SQ and GF-7A? Should customers switch to them?

API SQ (American Petroleum Institute) and ILSAC GF-7A, fully enforced in 2026, represent the latest performance standards for gasoline engine oils. They deliver improvements over the prior SP / GF-6A standard in three key areas:

1. Superior Low-Speed Pre-Ignition (LSPI) protection, solving a common pain point for turbocharged engines;

2. Stricter fuel efficiency requirements, delivering a 2%–3% fuel saving effect;

3. Upgraded emission compliance for China National VI b and Euro 7 vehicles.

Recommendation: Owners of China National VI vehicles are advised to select SQ-certified oils; SP-grade oil remains fully adequate for older vehicles with no mandatory upgrade requirement.

The base oil classification family: How to distinguish Groups I through V

The API categorizes base oils into five groups:

1. Group I: Solvent-refined mineral oil – lowest cost, mediocre performance, gradually phased out of the market;

2. Group II: Hydrotreated mineral oil – mainstream mass-market grade with balanced cost and performance;

3. Group III: Severe hydrocracked / isomerized oil – performance close to synthetic, yet labeled 'fully synthetic' remains controversial in the industry;

4. Group IV: PAO (Polyalphaolefin) – genuine full-synthetic base stock with top-tier performance;

5. Group V: Specialty stocks including esters, silicones – used in aviation and motor racing applications.

Purchase tip: Check PAO content listed on product labels; blends of Group III and PAO are the dominant commercial 'full synthetic' formulations on the market.

IX. Technical Highlights (Wednesday Special Topic: Automotive Lubricants)

Kunlun Tianrun rolls out full API SQ-compliant portfolio, covering premium specialty oils to core mainstream product lines

On May 8, Kunlun Lubricants launched API SQ-certified new products in Xi’an, extending the world’s highest-grade gasoline engine oil standard across its entire core product matrix. Key upgrades include enhanced LSPI suppression, chain wear protection and fuel efficiency versus the previous SP standard. Domestic lubricant brands now compete head-to-head with global majors Mobil and Shell in the high-end oil market, with hybrid-specific lubricant formulations emerging as a high-growth blue ocean segment.

Hidden reshuffling hits lubricant OEM industry in 2026 amid three overlapping headwinds

Three concurrent pressures reshape OEM manufacturers: rising new energy vehicle penetration (high technical barriers for hybrid-dedicated oils), stricter upgraded standards (API SQ / ACEA 2025), and fragmented sales channels featuring numerous small brands with low individual sales volumes.

OEM factories must adopt flexible production capacity to survive, while manufacturers lacking independent R&D capabilities can only compete via price undercutting. Hybrid-specific lubricant formulations represent a promising new market segment.