Lubricants Market Morning Report 20260525

Market Brief (Formal English for Official Website)

I. Global Market Updates

Crude oil plunges sharply again on May 24: WTI drops below $92 (-5.38%), Brent falls under $96 (-4.91%)

The pending 60-day U.S.-Iran ceasefire agreement triggered a sharp unwinding of geopolitical risk premiums. WTI crude closed at USD 91.41 per barrel, down 5.38%, while Brent settled at USD 95.29 per barrel, a decline of 4.91%.

WTI lost around 14% cumulatively this week, and Brent shed roughly 10%, marking the largest weekly drop so far this year. Analysts predict Brent could further slide to the $85–90 range if the agreement is officially signed.

Day 87 of U.S.-Iran conflict: Brent down 5.2% week-on-week to $103.54; quantitative model pins June Brent midpoint at $108

Crude prices swung violently on May 22–23. On May 22, rumors of collapsed talks lifted oil prices intraday to $108 before a pullback to a close of $102.58 (-2.3%). On May 23, prices edged up to $103.54 (+0.94%).

For the full week, WTI tumbled 8.4% to $96.6, while Brent fell 5.2%. Quantitative models forecast Brent’s central price at $108 in June, predicated on no finalized deal.

Next domestic oil price adjustment scheduled for June 4; current crude change rate at -2.8%, RMB 140/ton cut expected

Driven by positive progress in U.S.-Iran negotiations and the crude slump, the crude oil price change rate turned negative to -2.8% in the current pricing cycle (May 21 – June 4), corresponding to an estimated reduction of RMB 140 per ton (approximately RMB 0.11–0.13 per liter).

If the current downward trend persists through the end of the cycle, the price hike implemented on May 21 will likely be fully reversed by June 5.

Weekly Crude Report: U.S. & Iran return to negotiating table, global inventories remain at historic lows

The EIA projects a global crude supply deficit of around 2.6 million barrels per day in 2026. IEA data shows observable global inventories drew down by a record 250 million barrels in March–April, equivalent to a daily loss of 4 million barrels.

Even if a U.S.-Iran deal unlocks Iran’s 2–3 million barrels per day of export capacity, the short-term supply gap cannot be fully filled.

II. Lubricant Industry News

Shell Q1 net profit hits USD 6.9 billion, doubling quarter-on-quarter; lubricant division benefits from high oil prices

Shell’s adjusted net profit reached USD 6.9 billion in Q1 2026, nearly doubling from Q4’s USD 3.3 billion. Geopolitical tensions in the Middle East boosted refining profit margins, driving notable revenue growth for Shell’s lubricant and chemical segments. Other international majors including Mobil and BP also released strong Q1 financial results.

Domestic bunker fuel prices edge lower; mainstream price for low-sulfur 180cSt stands at RMB 5,350–5,850/ton

As of May 22, ex-ware wholesale quotations for domestic low-sulfur 180cSt fuel oil were flat day-on-day at RMB 5,350–5,850/ton. Bearish crude sentiment slightly eased blending costs, and market participants expect the 180cSt benchmark to slip moderately to RMB 5,300–5,450/ton next week.

National average price of No.0 diesel rises to RMB 8.44/liter, increasing cost pressure for truck operators

After the May 21 price adjustment, the national retail average of No.0 diesel hit RMB 8.44 per liter, with Beijing at RMB 8.53/liter and Chengdu at RMB 8.50/liter. If the planned RMB 140/ton cut takes effect on June 4, retail prices will fall to roughly RMB 8.30/liter. Four working days have passed in the current cycle, and the downward adjustment trend remains solid.

III. South American Market

Latin American oil output projected to hit 8.8 million bpd in 2026; Venezuela recovers to pre-sanction levels

Following U.S. expansions of Venezuelan trade licenses, PDVSA’s output nears 1 million barrels per day. The EIA forecasts production will rebound to 1.1–1.2 million bpd by late Q2, matching pre-blockade volumes.

Brazil’s May soybean exports reached 16 million tons, up 12.8% year-on-year. Mexico signed a crude supply agreement with Japan to fill supply gaps stemming from Iran tensions. Latin American oil producers will face revenue headwinds if crude prices slide further on a finalized U.S.-Iran deal.

IV. African Market

Africa Nuclear Summit advances energy transition; lubricant market grows steadily amid industrialization

The Africa Nuclear Innovation Summit concluded in Rwanda on May 19. The IAEA Director General stated nearly 600 million Africans lack stable power, calling for accelerated nuclear energy investment. ExxonMobil, Shell and other firms have developed deepwater oilfields in Nigeria and Angola.

The African lubricant market features a low base but rapid growth driven by industrialization and infrastructure construction, making it a high-potential overseas market for Chinese brands.

V. Russian Market

Russian crude sanctions waiver extended another 30 days to June 17; Bessent: Flexibility for energy-vulnerable nations

U.S. Treasury Secretary Bessent announced on May 18 a further 30-day extension of sanctions exemptions for seaborne Russian crude until June 17, noting the measure “provides flexibility for the world’s most energy-vulnerable countries”. The waiver only applies to cargoes already loaded onto vessels.

If a U.S.-Iran agreement resumes Iranian crude exports, Russian oil will lose its price discount advantage. Iranian heavy crude shares similar specifications with ESPO crude yet boasts superior quality with no sanctions risk premiums.

VI. South Asian Market

India gains breathing room from extended Russian oil waiver and prospective U.S.-Iran deal, yet long-term energy security remains fragile

India receives dual buffers: the 30-day extension of Russian crude supply waivers avoids immediate shortages, and a finalized U.S.-Iran deal will add Iranian oil as an alternative supply source.

Nevertheless, India’s strategic petroleum reserves only cover 9.5 days of consumption (the IEA recommends a 90-day reserve buffer), with crude import reliance hitting 91%, leaving structural vulnerabilities unaddressed. After six days of oil-seeking diplomacy across five nations, Modi’s administration is rushing to sign long-term supply contracts with Saudi Arabia and the UAE to reduce dependence on Russian crude.

VII. Malaysian Market (Marine Lubricants)

Bunker fuel trades at steady prices, bearish sentiment intensifies for next week

Domestic bunker fuel markets showed muted volatility on May 22, with the average 180cSt price holding flat at RMB 5,388/ton. Easing supply risks from progressing U.S.-Iran peace talks and falling international crude prices are set to marginally reduce bunker blending costs. Market participants expect mainstream 180cSt quotations to range from RMB 5,300–5,450/ton next week amid pervasive bearish sentiment.

VIII. Lubricant Popular Science (For Customers)

What a U.S.-Iran peace deal means for the lubricant industry: short-term benefits, medium-term pressure

If the deal is signed, global crude supply will rise by 2–3 million barrels per day, pulling crude prices down from above $100 to the $85–95 band.

Positive impacts: Base oil (accounting for 70–90% of lubricant raw material costs) will become cheaper, creating room for manufacturers to cut prices and lowering procurement costs for downstream repair shops and distributors.

Downside pressure: The 5–10% price hike wave rolled out between March and May amid supply tightness will face corrective pressure; distributors with large pre-existing inventories risk inventory value depreciation.

Advice: Avoid bulk stockpiling in the short term (1–2 months); build up inventories only after base oil prices see sufficient corrections.

What is the shelf life of lubricants? Can expired oil still be used?

• Unopened sealed lubricants: 3–5 years for mineral oils; 5–8 years for fully synthetic oils.

• After opening: Use within 1 year (contact with air and moisture accelerates oxidation).

Three indicators for deterioration judgment:

1. Odor: Sour, rancid smell signals oxidative degradation;

2. Appearance: Darkened or turbid oil indicates contamination or deterioration;

3. Foam test: Persistent non-dispersible foam means anti-foam additives have failed.

Note: Storage conditions matter greatly. Shelf life is halved if stored at temperatures above 30°C or under direct sunlight.

IX. Technical Highlights (Monday Special Topic: Market Outlook)

Full breakdown of the U.S.-Iran agreement: 60-day ceasefire, open Hormuz transit, resumption of Iranian oil exports, with outstanding disagreements remaining

Core framework of the deal: A renewable 60-day Memorandum of Understanding, free transit through the Strait of Hormuz after Iran clears underwater mines, full resumption of Iranian crude sales, U.S. lifting of port blockades and partial sanctions waivers.

Key sticking points: Disposal of high-enriched uranium, scope of sanctions relief, and synchronized ceasefire on the Lebanon front. Iran insists it retains administrative jurisdiction over the strait, while the U.S. demands “action prior to sanctions relief”. The final text is not finalized and negotiations could break down at any moment.

Quantitative model forecast: Brent midpoint at $108 in June without a deal, likely below $90 with a signed agreement

Brent crude rallied from $80 to a peak of $113 (+41%) over the 87 days of U.S.-Iran tensions. Quantitative analysis estimates a $15–20 per barrel geopolitical risk premium will be erased upon deal signing, pushing Brent down to $85–90.

Yet record-low global inventories and sustained OPEC+ production cuts form firm downside support, making a drop below $80 unlikely. For the lubricant sector, base oil prices are projected to follow crude lower in July and August.

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