Lubricants Market Morning Report 20260527

Market Brief (Official Website Standard English Version)

I. Global Market Updates

Violent crude swings on May 26: WTI settled at $93.89 (-2.81%), Brent closed at $99.58 (+3.58%)

The crude market diverged sharply on May 26. WTI once tumbled below $89 to a recent low and closed at USD 93.89 per barrel, down 2.81%. Brent rebounded to $99.58 per barrel with a 3.58% gain after U.S. military strikes on southern Iran. The price spread between the two benchmarks widened to $5.69. For the whole month of May, WTI lost over 20% cumulatively, while Brent fell roughly 12%.

U.S.-Iran deal 'nearly finalized': 60-day ceasefire + Hormuz reopening + $12bn asset unfreezing

On May 23, Trump announced negotiations for the U.S.-Iran agreement were 'basically completed'. Core clauses of the Memorandum of Understanding include extending the bilateral ceasefire for 60 days, resuming full navigation through the Strait of Hormuz within 30 days, Iran’s commitment to nuclear non-proliferation, the U.S. lifting of port blockades, phased unfreezing of USD 12 billion Iranian overseas assets, and partial sanctions waivers to resume Iranian crude exports. However, Rubio stated on May 26 that textual revisions would take 'several more days'.

Domestic refined oil prices set for RMB 280/ton cut on June 4, fully offsetting two May hikes

As of the 3rd working day on May 26, the crude oil price change rate stood at -5.11%, corresponding to a price reduction of RMB 280 per ton (equivalent to RMB 0.22–0.26 per liter). The total RMB 395/ton price hike accumulated in May is expected to be fully erased on June 4. Currently, the national average retail price of No.92 gasoline hits RMB 8.76 per liter, and No.95 gasoline exceeds RMB 9.35 per liter.

Rubio: The Strait of Hormuz must be 'fully open and free of tolls'; wording negotiations to last several more days

U.S. Secretary of State Rubio stated in India on May 26 that textual consultations for the U.S.-Iran MOU would take extra days, and the Strait of Hormuz 'must remain fully open with zero transit fees'. A Wall Street Journal report noted negotiation progress has slowed, with both sides deadlocked over Iran’s nuclear program and the scope of sanctions relief.

Iran brings submarine cables under strait jurisdiction, threatening $10 trillion in global financial transactions

Iran established the Persian Gulf Strait Administration on May 18, mandating all submarine cables crossing the waterway to obtain permits, pay transit fees and submit to Iranian legal jurisdiction. 95% of intercontinental data transmission relies on submarine cables, with at least seven critical trunk lines passing through the strait. Khamenei remarked Iran will open new battlefields in sectors where rivals lack advantages.

II. Lubricant Industry News

May base oil prices plunge 6%; 150N average RMB 9,783/ton, refineries cut runs to evade risks

Domestic output of Group I/II/III base oils reached 560,000 tons in May, a 4.44% month-on-month decline, with Group II capacity utilization only at 57.62%. The monthly average price of 150N base oil was RMB 9,783/ton (down 6% MoM), and 500N slid 1% to RMB 10,578/ton. The market entered seasonal low demand in late April, while planned maintenance at multiple refineries (Huanghe New Materials, Xintai Petrochemical, Liaohe Petrochemical) intensified in mid-May. Tightened supply may support price stabilization in Q3.

Uni Titanium Energy Series 5 first passes dual API SQ / ILSAC GF-7A certification; older SP-grade products may fail testing

API SQ and ILSAC GF-7A standards cover eight core metrics including fuel efficiency, exhaust system compatibility, Low-Speed Pre-Ignition (LSPI) suppression and timing chain wear protection. Products certified under the previous SP standard may not meet the updated requirements. Uni Titanium Energy Series 5 completed the dual certification upgrade ahead of peers; Kunlun Tianrui launched its full line of SQ-grade new products at a Xi’an event on May 8. The whole industry is accelerating the shift to the latest specifications.

Domestic IFO 180 bunkers quoted RMB 5,700–6,650/ton; falling crude eases blending costs

IFO 180 bunker fuel quotations across domestic ports on May 26: Shanghai RMB 6,020/MT, Ningbo RMB 5,800/MT, Qingdao RMB 6,650/MT. Bearish crude sentiment slightly lowers blending costs, yet fundamental headwinds persist for the bunkering sector. Suppliers face strong resistance to new order signing, forcing prices to stay flat.

III. South American Market

Rubio pitches large Venezuelan crude supply deal during India visit; Modi secures alternative oil sources

Amid the Hormuz shipping crisis, U.S. Secretary of State Rubio traveled to New Delhi on May 26 to market large-scale Venezuelan crude supplies to fill Middle Eastern supply gaps. China previously cut purchases of Venezuelan oil, allowing the U.S. to redirect such cargoes to India. While India gains short-term alternative supply, long-term reliance on U.S. oil exports deepens, undermining its diplomatic autonomy.

IV. African Market

Africa Nuclear Summit calls for accelerated investment; lubricant demand rises alongside industrialization

The Africa Nuclear Innovation Summit concluded in Rwanda on May 19. The IAEA highlighted nearly 600 million people lack stable power and urged faster nuclear energy investment. ExxonMobil and Shell continue expanding deepwater oilfield developments in Nigeria and Angola. Though starting from a low base, Africa’s lubricant market boasts world-leading growth rates driven by industrialization and infrastructure construction, representing high-potential export opportunities for Chinese brands.

V. Russian Market

Russian crude sanctions waiver extended a second time to June 17; Iranian oil comeback to erode Russia’s price discount edge

U.S. Treasury Secretary Bessent granted a second 30-day extension of sanctions exemptions for seaborne Russian crude, valid until June 17. The official rationale is to 'preserve energy flexibility for vulnerable nations'. If the U.S.-Iran agreement is signed and Iran resumes exporting 2–3 million barrels of crude daily, Russian crude will lose its price advantage for Indian buyers, as Iranian heavy crude delivers superior quality without sanctions risk premiums.

VI. South Asian Market

Reliance’s April Russian crude imports down 38% MoM; first Iranian crude purchases in seven years

Reliance Industries cut April Russian crude imports to 217,800 barrels per day, a 37.9% month-on-month drop. Concurrently, the firm resumed purchasing Iranian crude for the first time in seven years following U.S. sanctions waivers. A finalized U.S.-Iran deal will speed up Iranian oil’s return to India’s market, with refiners including Reliance and Indian Oil revising procurement strategies to reduce dependence on Russian supplies.

VII. Malaysian Market (Marine Lubricants)

Singapore HSFO 380 bunkers $685–695/MT, VLSFO above $830/MT

Longzhong Information data dated May 21 shows Singapore bunker quotations: High-Sulfur Fuel Oil (380 cSt) USD 685–695 per metric ton, Very Low-Sulfur Fuel Oil above USD 830/MT. VLSFO at Singapore Port was quoted at USD 827.5 per ton on May 22, down USD 4.5. Declining crude prices ease bunker fuel costs, while marginal recovery in end-user shipping demand weighs down freight rates, leaving bunkering suppliers facing persistent order-signing resistance.

VIII. Lubricant Popular Science

Will lubricant prices drop alongside falling base oil costs?

The May average price of 150N base oil fell 6% month-on-month to RMB 9,783/ton, yet terminal lubricant retail prices will not decline immediately for three core reasons:

1. Manufacturers face a 1–2 month pricing lag, needing to deplete high-cost raw material inventories purchased earlier;

2. The industry completed a 5–10% round of price hikes between March and May, and sudden markdowns would damage brand reputation;

3. Non-base-oil costs including additives, packaging and logistics remain rigid and non-negotiable.

Market Forecast: If crude prices sustain a downward trend through July and August, a lubricant price cut window of 3–5% may open in Q3.

(Customer-Oriented Popular Science)

HTHS High-Temperature High-Shear Viscosity: Why it matters more than kinematic viscosity

HTHS (High-Temperature High-Shear Viscosity) simulates real oil film strength at engine bearings under 150°C and high shear rates. The API SQ standard lowers the minimum HTHS threshold from 3.5 mPa·s to 3.0 mPa·s for 0W-20 grades, meaning thinner oil films can still deliver adequate engine protection.

Oil selection guidance cannot rely solely on HTHS values: low HTHS improves fuel economy yet weakens protection under heavy loads; high HTHS offers robust component protection but increases fuel consumption.

Recommendations: Low HTHS grades for Japanese/Korean and hybrid vehicles; high HTHS lubricants for European and heavy-duty vehicles.

(Sales & Technical Training Material)

IX. Technical Highlights (Tuesday Focus: Additive Technology)

Additive technical upgrades under API SQ certification: LSPI suppression & chain wear protection take priority

Core technical upgrades introduced by API SQ / ILSAC GF-7A standards:

1. Optimized anti-LSPI (Low-Speed Pre-Ignition) additive formulations to prevent knocking and component damage in GDI / TGDI turbocharged engines;

2. New mandatory timing chain wear testing requiring specialized anti-wear additives in finished lubricants;

3. Improved fuel efficiency demands a balance of ultra-low base oil viscosity and stable HTHS performance, raising stricter synergy requirements for base stocks and additive packages.

Uni Titanium Energy and Kunlun Tianrui have completed full product upgrades to meet the new standards.

2026 Lubricant Industry Outlook: Hidden reshuffling of OEM contract manufacturing, hybrid-specific formulas become new competitive battleground

Three major industry headwinds:

1. New energy vehicle penetration curbs demand for conventional internal combustion engine oils, with a projected 750,000-ton (-22%) demand decline by 2028 compared to 2020;

2. Frequent start-stop cycles of hybrid powertrains demand customized anti-emulsification & anti-shear formulations; conventional lubricants will trigger premature failures after several thousand kilometers of use;

3. Hidden reshuffling of OEM contract manufacturing eliminates small-scale manufacturers lacking long-term technical accumulation.

Core industry trends: Premiumization, new energy specialization and multi-scenario customized lubrication solutions, with additive technology forming the core competitive moat.

Official Website Standard Industry Glossary