Lubricants Market Morning Report 20260526

Market Brief (Official Website Formal English Version)

I. Global Market Updates

Crude oil suffers sharp slump on May 25: WTI falls below $91 (-6.09%), Brent slips under $95 (-5.45%)

A string of positive developments from U.S.-Iran negotiations triggered a rapid unwinding of geopolitical risk premiums. WTI crude settled at USD 90.72 per barrel, down 6.09%, while Brent closed at USD 94.75 per barrel, dropping 5.45%. Shanghai crude futures (SC) plunged 6.64% to RMB 622.6 per barrel. WTI briefly dipped below $90 for the first time in three weeks.

Brent has now plummeted more than 16% from its May high of $113, marking its steepest monthly decline in two years.

Early hours May 26: WTI briefly breaks $90; U.S.-Iran deal likely to be announced on the 26th

Latest market data from early May 26 shows WTI temporarily sliding below $90 per barrel. Trump stated negotiations were 'progressing smoothly', while Pakistan’s Army Chief said an agreement was 'close to conclusion'. With Qatar mediating, the U.S. and Iran reached a preliminary understanding on asset unfreezing, and a formal deal announcement is highly probable on May 26. A senior Iranian delegation consisting of Parliament Speaker, Foreign Minister and Central Bank Governor is holding final talks in Doha.

Domestic refined oil prices set for RMB 170/ton cut on June 4 (approx. RMB 0.13–0.15 per liter), nearly erasing all May hikes

Over the first two working days of the new pricing cycle (May 21 – June 4), the crude price change rate stood at -3.93%, corresponding to a price reduction of RMB 170 per ton, equivalent to RMB 0.13–0.15 per liter. If crude prices linger within the $90–95 range through the end of the cycle, the cut may expand to over RMB 200 per ton.

Total hikes of nearly RMB 400/ton implemented on May 8 (+320/310) and May 21 (+75/70) will be mostly reversed in the June 4 adjustment.

Global inventories remain at historic lows; technical rebound likely after crude drops below $90

IEA data records a record drawdown of 250 million barrels in observable global inventories between March and April. Even if a U.S.-Iran deal unlocks Iranian crude export capacity of 2–3 million barrels per day, restocking will take time.

OPEC+ persists with agreed production cuts, and Saudi Arabia has repeatedly stated readiness to adjust output at any time. The $85–90 range for Brent is seen as a solid support level with limited downside risk.

II. Lubricant Industry News

Looming correction after base oil & lubricant price rally: 5–10% hikes March–May, potential price cut window in June

Major brands including Mobil, Shell, Castrol, Uni Lubricants and Great Wall rolled out 5–10% price hikes between March and May, driven by rising base oil costs and supply tightness in the Strait of Hormuz.

However, the sharp crude selloff on May 24–25 has put downward pressure on base oil prices. Waste lubricating oil holds steady at RMB 4,450–4,600/ton amid mounting bearish sentiment. If crude stays at $90–95 through June, the price rally may reverse into a round of markdowns.

Updated quotations for Mobil Delvac, Kunlun Tianwei & Uni Youya King CI-4 diesel engine oils released May 25

Tangpu Information published updated pricing on May 25 for CI-4 heavy-duty diesel oils: Mobil Delvac, Kunlun Tianwei and Uni Youya King. Major refineries under PetroChina and Sinopec released their latest base oil offers on May 22, alongside full schedules for base oil plant maintenance.

III. South American Market

Mysteel Morning Brief: Over 100 coking coal mines suspended in Shanxi; Latin American oil exports pressured by falling crude prices

Mine shutdowns at more than 100 coking coal facilities in Shanxi tighten domestic coking coal supply. In Latin America, Venezuelan crude output has recovered to nearly 1 million barrels per day, returning to pre-sanctions levels.

Should a U.S.-Iran deal unlock Iranian crude and push Brent below $90, fiscal revenues of Latin American oil-producing nations will face headwinds. Brazil’s May soybean exports hit 16 million tons (+12.8%), with robust shipping demand lifting bunker fuel consumption.

IV. African Market

Sustained African industrialization fuels lubricant demand growth, outpacing global average

Nearly 600 million people across Africa lack reliable power, spurring accelerated investment in nuclear energy and oil & gas. Deepwater oilfield developments in Nigeria and Angola boost demand for industrial lubricants.

Chinese brands (Kunlun, Great Wall, Uni Lubricants) continue expanding market share in Africa via cost-performance advantages. Though starting from a low base, the African lubricant market boasts annual growth of 6–8%, making it a high-potential destination for overseas expansion.

V. Russian Market

U.S. extends Russian crude waiver as a pre-visit gesture for Rubio’s India trip; Iranian oil comeback to erode Russian crude discounts

Ahead of Secretary of State Rubio’s May 23 India visit, the U.S. extended sanctions exemptions for seaborne Russian crude by another 30 days as a diplomatic goodwill gesture.

If a U.S.-Iran accord is signed to resume Iranian crude exports (superior quality to ESPPO crude with no sanctions risk premium), Russian oil will lose its price discount advantage for Indian buyers. Iranian heavy crude has similar specifications to ESPO yet superior quality, likely prompting India to shift procurement toward Iran.

ESPO: Eastern Siberian-Pacific Ocean pipeline crude

VI. South Asian Market

Heatwave + oil supply anxiety lift Indian diesel sales by 20%; Reliance’s Russian crude imports down 38% MoM

Heatwaves across India in May boosted fuel demand: Maharashtra diesel sales rose 19.66% year-on-year, gasoline up 20.39%.

Reliance Industries cut April Russian crude imports to 217,800 barrels per day, a 37.9% month-on-month drop, while resuming purchases of Iranian crude for the first time in seven years following U.S. sanctions relief.

India relies on imports for 85% of its crude consumption, 40% of which transits the Strait of Hormuz. The country will rank among the biggest beneficiaries if a U.S.-Iran agreement takes effect.

VII. Malaysian Market (Marine Lubricants)

Fuel oil futures crash 6.26%! Singapore HSFO at $670/MT, VLSFO above $804/MT

The main fuel oil futures contract on the Shanghai Futures Exchange (SHFE) settled at RMB 3,862 per ton on May 25, down 6.26%.

Singapore bunker quotations: High-Sulfur Fuel Oil (380 cSt) USD 670.21 per metric ton, Very Low-Sulfur Fuel Oil USD 804.48 per metric ton, with spot prices trading at a premium to futures. The 380 cSt benchmark averaged $730/MT for the month (+4.14%) despite the single-day slump.

The bunkering market tracked crude into a sharp downtrend, with bearish sentiment set to persist through the next week and suppliers facing resistance to new order bookings.

VIII. Lubricant Popular Science

What does the rollout of the new API SQ standard mean for end users?

API SQ / ILSAC GF-7A, the 2026 latest gasoline engine oil standard, supersedes SN and SP grades. Core upgrades:

1. Lower sulfate ash, fully compatible with GPF gasoline particulate filters;

2. Improved fuel economy (1–3% fuel savings);

3. Enhanced oxidation resistance for extended oil drain intervals.

Guidance for end users: 2026 model new vehicles require SQ-certified oil to maintain valid factory warranty. Older vehicles originally using SP-grade oil can safely upgrade to SQ for superior overall performance.

Sales talking point: 'SQ is the new industry standard, compatible with older vehicles, delivering better fuel efficiency and longer service life than SP.'

(Customer-Oriented Popular Science)

Can different viscosity grade lubricants be mixed? Emergency contingency guidelines

General principle: Mixing different oil grades is not recommended.

Emergency exception: If 5W-30 runs out and only 10W-30 is available, temporary mixing is allowed for products of the same brand and same formulation type (e.g., full synthetic + full synthetic), provided viscosity differs by no more than one grade.

Strict prohibitions:

1. Do not mix different formulation categories (mineral oil + synthetic oil) – incompatible additive packages may form precipitates;

2. Do not mix diesel engine oil with gasoline engine oil – ash content specifications differ drastically.

Any mixed oil must be fully replaced within 1,000 kilometers of driving.

(Sales & Technical Training Material)

IX. Technical Highlights (Tuesday Special Topic: U.S.-Iran Negotiations)

Washington Post, New York Times & Fox News confirm deal 95% finalized, yet last-minute breakdown remains possible

Fox News cited U.S. officials stating the framework agreement is 95% complete, with consensus reached on nuclear stockpile limits and Strait of Hormuz transit rules; negotiations now center on wording fine-tuning. Trump has set a 5–7 day deadline for a final accord, warning military strikes could resume if talks collapse.

Per the Washington Post, once the Memorandum of Understanding is signed, full navigation through the Hormuz Strait will resume within 30 days alongside U.S. unfreezing of USD 12 billion in Iranian overseas assets. The New York Times noted final ratification by both national leaders will take several additional days.

'Navigation service fee' vs 'transit toll': Word debate exposes non-negotiable red lines

Iran’s Foreign Ministry Spokesman Baghaei emphasized the charges levied on vessels passing the Strait of Hormuz are 'navigation service fees', not transit tolls. Iran and Oman are jointly drafting a formal protocol for safe maritime transit.

Iran’s non-negotiable demands: unfreezing of USD 25 billion in assets (not 12 billion), and full sanctions lifting prior to nuclear negotiations. Major divisions persist over the sequencing of 'action for relief' vs 'relief prior to action'. Negotiation outcomes are expected to emerge on May 26.