Lubricants Market Morning Report 20260522

Market Brief (Official Website Standard English Translation)

I. Global Market Updates

Settlement Prices May 22: WTI down 1.94% at $96.35, Brent down 2.32% at $102.58

International crude futures closed roughly 2% lower in the early hours of May 22. July WTI crude fell 1.94% to $96.35 per barrel, while July Brent crude slid 2.32% to $102.58 per barrel.

Prices plunged over 5% on May 20 on upbeat U.S.-Iran negotiation expectations, rebounded during the May 21 overnight session then retreated again, showing extreme volatility.

May 21 Overnight Session: WTI rose 3.56% to $101.76, Brent climbed 3% to $108.11

International crude prices staged a sharp rally on the evening of May 21, with WTI peaking above $106 per barrel, marking an intraday gain of over 4%. Optimism over U.S.-Iran peace talks and improved vessel transit data in the Strait of Hormuz fueled a rebound from the May 20 crash.

Early Hours May 22: Rumors of finalized U.S.-Iran deal draft trigger another crude slump

Al Arabiya TV reported in the early hours of May 22 that mediated by Pakistan, the U.S. and Iran had finalized the final draft of an agreement, which would be officially announced within hours. The news triggered a steep plunge in both crude benchmarks with a rapid unwind of geopolitical risk premiums. Analysts expect Brent to fall to the $95–100 range if the deal is formally signed.

Domestic fuel price hike implemented May 21: Gasoline +RMB75/ton, Diesel +RMB70/ton, approx. RMB0.06 per liter

The NDRC raised domestic refined oil prices at 24:00 on May 21, lifting gasoline prices by RMB75 per ton and diesel by RMB70 per ton. Prices of No.92, No.95 and No.0 diesel all rose by around RMB0.06 per liter; filling a 50-liter tank costs an extra RMB3.

Strait of Hormuz shipping disruptions and the U.S.-Iran deadlock pushed average crude prices up in this cycle, yet the May 20 crude crash will impact the next pricing round (adjustment date June 5).

Trump: U.S.-Iran talks enter 'final stage', willing to wait a few more days

Trump stated U.S.-Iran negotiations have reached the 'final stage' and he is willing to extend the timeline to secure a formal agreement. However, Netanyahu expressed deep skepticism over the talks and called for resumption of military strikes. Divergent next-step plans between the U.S. and Israel leave the negotiations subject to sudden shifts.

II. Lubricant Industry News

Ruifeng New Materials: Global lubricant market shifts toward high-end, new energy & multi-scenario applications

The Secretary to the Board of Ruifeng New Materials (300910.SZ) responded to investor inquiries: Rising penetration of pure electric vehicles has driven structural adjustments across the global lubricant market, though overall demand will not simply decline.

The industry is transitioning from a market dominated by traditional internal combustion engine oils toward high-end, new energy-oriented and multi-scenario-focused development. The global lubricant market size is projected to reach USD 237.98 billion by 2037 (vs USD 156 billion in 2024), with the Asia-Pacific region accounting for 45% of total volume.

Domestic waste lubricating oil ex-factory prices stand at RMB 4,450–4,600/ton, market trades sideways

As of May 18, mainstream delivered prices for waste lubricating oil nationwide were RMB 4,450–4,600 per ton. Terminal demand has entered the off-season, slowing base oil inventory turnover and shrinking rigid demand. Price fluctuations are limited to a RMB 50–100 range with narrow upside/downside room.

Hidden reshuffling hits lubricant OEM sector in 2026 amid three overlapping pressures

OEM manufacturers face elimination without transformation, squeezed by three headwinds: fast-growing new energy vehicle penetration (hybrid-dedicated oils carry high technical barriers), stricter upgraded standards (API SQ / ACEA 2025), and fragmented sales channels.

Formulations tailored for hybrid powertrains have become a new blue ocean segment. Vehicle lubricant demand in 2028 is forecast to drop by approximately 750,000 tons (-22%) compared to 2020 levels.

III. South American Market

Venezuela’s crude output nears pre-sanction levels; EIA forecasts 1 million bpd by mid-2026

Following U.S. expansion of trade permits for Venezuela, traders including Chevron, Vitol and Trafigura have resumed Venezuelan crude exports. PDVSA reversed production cuts with output approaching 1 million barrels per day. The EIA projects output will recover to pre-blockade levels of 1.1–1.2 million bpd by late Q2 2026. Mexico signed a crude supply deal with Japan to ease supply shortages stemming from Iran tensions.

IV. African Market

Africa Energy Security Summit: Nearly 600 million lack electricity; energy transition financing takes center stage

The Africa Nuclear Innovation Summit opened in Rwanda on May 19. IAEA Director General Grossi noted nearly 600 million Africans lack access to power, making energy security a core development priority. The summit called for improved financing mechanisms to turn nuclear energy policy plans into investable projects. The African lubricant market maintains steady growth alongside industrialization.

V. Russian Market

Dramatic reversal: U.S. extends Russian crude sanctions waiver another 30 days to June 17, 48 hours after expiry

Forty-eight hours after the May 16 expiration of the Russian crude exemption, U.S. Treasury Secretary Bessent announced a further 30-day extension until June 17 on May 18. Analysts state the U.S. aims to stabilize global crude prices and ease pressure on allies, while pressuring India to reduce Russian oil reliance. The waiver only applies to cargoes already loaded onto vessels; new crude purchases remain restricted.

VI. South Asian Market

India’s emergency oil diplomacy: Modi visits five nations in six days to secure crude, encourages food/gold savings to preserve foreign exchange

India’s energy crisis intensified after the May 16 Russian crude waiver expiry. Modi conducted a six-day five-country tour to source alternative crude supplies, while urging citizens to cut food consumption and gold purchases to conserve foreign exchange reserves.

India’s strategic petroleum reserves only cover 9.5 days of consumption (the IEA recommends a 90-day reserve buffer), exposing structural energy vulnerabilities. The 30-day waiver extension offers temporary relief, yet diversified long-term supply layouts remain necessary.

VII. Malaysian Market (Marine Lubricants)

Strait of Hormuz update: 31 vessels transit; U.S. forces strike 4 merchant ships, forcing 94 to reroute

Iran’s Revolutionary Guard stated 31 ships passed through the Strait of Hormuz in the 24 hours to May 21 (up from 26 the prior day), yet Iran mandates all vessels to coordinate transit through its authorities. Trump criticized Iran’s plan to collect navigation service fees.

U.S. military strikes targeted four merchant vessels in the strait, forcing 94 ships to alter navigation routes, with over 20 U.S. warships enforcing maritime blockades. Combined with improved transit signals and rumors of a finalized U.S.-Iran deal draft, crude faces intensified near-term downward pressure.

VIII. Lubricant Popular Science (For Customer Reference)

What is base oil? Key differences between mineral, semi-synthetic and fully synthetic oils

Base oil accounts for 70–95% of lubricant composition and determines core oil performance, categorized into three main grades:

1. Mineral oil (Group I): Refined via crude distillation, the lowest-cost option for general operating conditions;

2. Synthetic oil (Group III / PAO Polyalphaolefin): Chemically synthesized, featuring high viscosity index, superior low-temperature fluidity and extended service life;

3. Semi-synthetic oil (blend of Group II & Group III): Balanced cost-performance choice.

Note: Commercial 'fully synthetic' products vary widely in quality. Some only use Group III base stocks labeled as full synthetic, while premium top-tier oils adopt pure PAO. Check PAO content listed on product labels for accurate differentiation.

Does lighter-colored lubricant mean better quality? Not necessarily!

Color is not a direct indicator of lubricant quality. Base oil hues vary by grade: Group I mineral oils range from pale yellow to dark brown; Group II/III hydrocracked oils appear lighter (transparent to pale yellow); PAO full synthetic oils are nearly water-white. Additives also alter color (metal-containing detergents may create greenish/blue undertones).

Critical warning: Darkening color after service signals oxidative degradation, which is the key red flag to monitor. Minor batch-to-batch color differences for identical brand/grade oils fall within normal manufacturing tolerance.

IX. Technical Highlights (Friday Special Topic: Market & New Energy Outlook)

Reference base oil quotations: Shandong qualified Grade 100# at RMB 8,080/ton; Thailand 150BS Bright Stock at RMB 13,650/ton

Quotations released by Shandong Zhihengda on May 15: Qualified Grade 100# base oil priced at RMB 8,080/ton (kinematic viscosity: 103.2 cSt); Thailand-origin 150BS bright stock base oil at RMB 13,650/ton.

Surging base oil prices keep lubricant manufacturing costs elevated, with cost pressure continuously passed downstream to distributors and end users.

Countdown to full API SQ standard rollout: Top brands Uni Lubricants & Kunlun complete upgrades, small brands face shrinking transition window

The new API SQ / ILSAC GF-7A standard will be fully enforced. Leading manufacturers Uni Lubricants and Kunlun have finished full product certification upgrades, while small and mid-sized brands face dual burdens of formula rework and certification expenses. Small OEM factories lacking independent R&D capacity will be phased out rapidly.

Lubrizol, a leading global additive supplier, launched the Chinese trademark 'EVOGEN Yijing', securing an early foothold in the e-drive lubricant market segment.