The rising cost of India's crude imports is boosting the attractiveness of overseas base oil supplies, particularly with spot availability likely to rise when production plants in Asia-Pacific return from maintenance.
India sourced 40pc of its crude imports from the Mideast Gulf and 37pc from Russia — mostly Urals — in the first half of 2025, Kpler data show.
The cost of buying term supplies of Iraqi Basrah Medium crude, including freight, increased by more than $5/bl in June from May to $70.30/bl, according to Argus' calculations. The cost of Urals delivered to India's west coast rose by more than $7/bl to $68.98/bl in the same time. These increases were largely caused by the sharp rise in crude benchmarks on the back of the Israel-Iran conflict.
Although a ceasefire was agreed on 24 June, and has held, outright values for Russian Urals remain higher on the month and could remain so as refiners add a premium for security of supply, with cargoes from the Mideast Gulf still subject to sustained concerns about disruptions. These concerns are likely to underpin crude values from the Gulf.
Freight rates from the Gulf to west coast India for 130,000t capacity tankers jumped by 50pc between 16 and 24 June to $11.49/t as hostilities increased, according to Argus' assessments. Rates fell to $9.19/t by 2 July but this is 12pc above the average for May.
The rising cost of crude is likely to underpin India's domestically-produced base oil prices. Indian base oil buyers typically prioritise more competitively-priced domestic supplies, but the country's production is insufficient to meet requirements and imports make up the shortfall.
India is a net importer of base oils, especially for premium, light grades.
A heavy round of plant maintenances in Asia-Pacific is scheduled to end by the third quarter and this is likely to put downward pressure on import prices. The return from works of plants operated by Japanese refiners Eneos and Idemitsu, Thailand's IRPC and China's state-controlled Sinopec will probably increase Group I base oil availability for export in the second half of the year.
Indian demand for base oils is seasonally slow because of the monsoon season. This typically lasts from June to September, although it began in late May this year, and the resultant slowdown in transportation and industrial activities suppresses lubricant demand.
