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Base oil margins fall on feedstock, diesel prices

  • Market: Oil products
  • 06/04/26

US Group II base oil margins to feedstocks and competing fuels both fell for the week ended 3 April because feedstock and US Gulf coast diesel prices are rising quicker than base oil spot prices.

The Argus US domestic Group II N100 discount to four-week average US Gulf coast diesel widened by 9¢/USG on the week to reach 18¢/USG, compared with a year-earlier premium of 98¢/USG. US Gulf diesel's premium to Group II N100 is currently at an all-time high, according to Argus data.

Four-week average US Gulf coast diesel prices rose to $3.93/USG last week, up from $3.69/USG the week before. This puts four-week average diesel prices up by $1.37/USG since the start of the US-Iran war during the week ended 6 March.

US Group II base oil spot prices rose last week because refiners are not offering spot, and many blenders are trying to build up inventories. Some market participants are able to obtain needed Group II volumes, while others are willing to pay higher prices in order to secure extra volumes.

The Argus US domestic Group II N100 premium to four-week average low-sulphur vacuum gasoil (VGO) declined to $1.01/USG, down from $1.06/USG a week earlier. Base oil premiums to low-sulphur VGO are still higher than 99¢/USG from around when the war began. Margins remained below year-earlier totals of $1.16/USG.

Four-week average low-sulphur VGO prices continued to rise because of firm global demand and limited supplies. Four-week average Brent crude levels are also up by 78¢/USG since the US-Iran war began, which is further supporting elevated VGO prices.

The four-week average low-sulphur VGO to four-week average WTI crude spread widened to its highest level since March 2025 at $18.60/bl, up from $16.72/bl last week.

By Karly Lamm

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News
10/04/26

Base oil prices remain elevated since ceasefire

Base oil prices remain elevated since ceasefire

London, 10 April (Argus) — The global base oils market is getting no respite from the ceasefire announcement in the Mideast Gulf, as logistic and feedstock issues that are constraining supply persist, market participants told Argus . The ceasefire announcement between the US and Iran on 7 April has not changed global base oil market fundamentals, and even if a permanent peace deal is reached it would take a couple of months before production and trade flows resumed, participants said. Group III supplies remain stranded in the Mideast Gulf as the strait of Hormuz remains effectively closed, and spot prices in net importing regions continue to surge. Argus -assessed Group III 4cst spot prices have increased more than twofold in the US and by 70pc in Europe since the war began in late February, to $2,406.50/t and $2,515/t respectively on 10 April. The Mideast Gulf accounts for about 20pc of global Group III output, according to Argus estimates. The region supplied 47pc of US Group III imports in 2025 and 72pc of European imports, EIA and Kpler data show. European and US term customers are on allocation and some suppliers looked at alternative means to get product out of the Middle East, including moving supplies via truck to Jeddah or Oman to be loaded on to containerships, bypassing the strait of Hormuz. But trucks are being prioritised for fuel movements, and with costs estimated at up to $1,000 per truck before loading and freight costs, spot offers would be raised by €1,000/t compared with assessed prices. No movements of this nature have been reported, and logistics costs are too high and complicated. Supply will anyway be limited from the region. Shell's 1.1mn t/yr Pearl Group III gas-to-liquid plant sustained missile damage to one of its two trains that will take a year to repair. Diesel margins over feedstock vacuum gasoil (VGO) reverted to a discount compared with light-grade Group I base oils when the ceasefire was announced. But the spread between the two remains minimal at $22.50/t, as assessed on 9 April. The five-year average premium that base oil carries over diesel after feedstock costs is $285/t. A higher and more sustained spread over diesel would need to happen before refineries consider increasing base oil production, participants told Argus . But supplies remain constrained as refineries undergo maintenances and some have production issues . Base oil run cuts at Asian refineries are ongoing because of feedstock supply disruptions from the Middle East, affecting Group I and Group II output. Refineries have to prioritise strategic fuels over base oil output. US suppliers are looking to move volumes there to support term customers. US refineries are also looking to building inventories for hurricane season, which typically runs from June to October. This continues to add upward pressure to prices. By Gabriella Twining Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

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News

Trump showing signs of frustration over Hormuz stasis

10/04/26
News
10/04/26

Trump showing signs of frustration over Hormuz stasis

London, 10 April (Argus) — US president Donald Trump is beginning to show signs of frustration over a lack of tangible progress with respect to reopening the strait of Hormuz ꟷ a key condition of the ceasefire that the US agreed with Iran earlier this week. The agreement announced on 7 April ostensibly called for an end to strikes by the US and Israel on Iran for two weeks, in return for Iran agreeing to provide safe passage for commercial vessels through the key waterway through co-ordination with the Iranian armed forces. But less than three days in, not only have transits through the strait not increased, they have actually fallen from the already low levels of the past few weeks. Less than eight vessels transited the strait on average in the two days since the ceasefire was agreed, according to Kpler data, down from more than 12 in the first week of April. This compares with more than 100 per day before the start of the war. "Iran is doing a very poor job, dishonourable some would say, of allowing oil to go through the strait of Hormuz. That is not the agreement we have!" Trump said on his Truth Social platform overnight. The slowdown has come, at least in part, due to infractions that Iran said its counterparts have made since the ceasefire was agreed. Tehran, specifically, objected to a massive bombing campaign that Israel carried out across Lebanon on 8 April, as it considered Lebanon to be part of the ceasefire agreement. Pakistan's prime minister Shehbaz Sharif said as much in his announcement of the ceasefire. But Israel's prime minister Benjamin Netanyahu has since insisted that the agreement did not include a ceasefire in Lebanon. The US has said the same. Iran's Fars news agency, which is affiliated with the Islamic Revolutionary Guard Corps (IRGC), cited an informed source shortly after Israel's bombing campaign on 8 April that the strait would "remain closed" until a full ceasefire was established in Lebanon. Kpler data showed just five vessels transited the strait on 8 April, down from 13 the day before. Iran also appeared to carry out strikes against several of its Arab Gulf neighbours in retaliation for the Israeli campaign, and strikes on oil infrastructure on the two islands of Lavan and Sirri, with both Saudi Arabia and Kuwait reporting significant damage to key energy installations, after the ceasefire agreement. In an earlier post on Truth Social, Trump hit out at "reports that Iran is charging fees to tankers going through the Hormuz strait". Iran had "better not be, and if they are, they better stop now!" he said. Trump was referring to a system that Iran has been employing in recent weeks whereby vessels have paid Tehran a fee to transit the waterway safely ꟷ a system first revealed by Iranian parliament member Alaeddin Boroujerdi in mid-March . Hamid Hosseini, the spokesman for Iran's oil, gas and petrochemical products exporters' union, told Argus this week that the system continues, with the fee charged directly linked to the volume of oil on board. "Shipowners are being asked to pay $1 per barrel, and that can be done in the local currency, rials, or cryptocurrency, but only after the vessel has received a permit from the IRGC," Hosseini said. Iranian lawmakers are also preparing to bring a bill formalising Iran's role as the guardian and guarantor of the waterway to the parliament for a vote. But others are pushing back against the idea of Iran taking control of the strait, or setting up a toll there. "Open the strait unconditionally," said Sultan al-Jaber, chief executive of Abu Dhabi's state-owned Adnoc on 8 April. "Iran has made clear… that passage is subject to permission, conditions and political leverage. That is not freedom of navigation. That is coercion." The European Commission, also on 8 April, said under international law, freedom of navigation must be insured, meaning "no payment or toll whatsoever". By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

News

Australia to underwrite refiners' spot fuel trades

10/04/26
News
10/04/26

Australia to underwrite refiners' spot fuel trades

Sydney, 10 April (Argus) — Australian government agency Export Finance Australia (EFA) will underwrite the financial risk of spot-market fuel and crude oil purchases by refiners Viva Energy and Ampol to support the country's fuel imports, energy minister Chris Bowen announced on 9 April. Under the agreement, the government will be able to direct where the additional fuel is distributed, prioritising regions facing tighter supply. The EFA is also finalising similar agreements with other companies. Government support will enable refiners to secure cargoes that would otherwise be considered uncommercial because of volatile prices and high spot-market costs. The EFA will update its public register with each transaction, Bowen said on 10 April. This falls under legislation passed last week that allowed the EFA to underwrite critical imports such as fuel and fertilizer, reducing the commercial risk for buyers as part of efforts to manage supply pressures linked to Iran's effective blockade of the strait of Hormuz. Under the legislation, the EFA can insure, indemnify, guarantee, lend, or enter into other arrangements including with third parties to support activities such as buying, selling, transporting, or storing a strategic material. Gasoil, jet fuel, crude oil and fuel oil are listed as strategic materials, as well as "any material experiencing supply chain disruptions". Australia's oil products demand averages nearly 1.1mn b/d, but its refineries supply only about one-fifth of that. This leaves the country heavily dependent on imports, leading to supply concerns since the US–Iran conflict began in late February. Ampol's 109,000 b/d Lytton refinery in Brisbane and Viva's 120,000 b/d Geelong refinery are the country's only major operating refineries. By Grace Dudley Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

News

Japan to ease oil bottleneck, ensure stable supply

10/04/26
News
10/04/26

Japan to ease oil bottleneck, ensure stable supply

Osaka, 10 April (Argus) — The Japanese government has moved to ensure stable supplies of oil products, some of which have faced distribution bottlenecks, while noting that overall fuel supply remains sufficient nationwide despite disruptions to Middle East crude flows. Concerns over securing supplies of oil products are growing among a wide range of industries in Japan, as bottlenecks emerge at the distribution stage. Heavy fuel oil and diesel are no longer as readily procured as they had been in the past, an official at the trade and industry ministry Meti said on 9 April. The government has already requested refiners and importers to ensure stable supplies regardless of whether customers are affiliated or not and regardless of whether business relationships exist, Meti said after a task force meeting held on 9 April to ensure the stable supply of critical goods against a backdrop of tensions in the Middle East. Tokyo has asked major refiners, including Eneos, Idemitsu and Cosmo Oil, to conduct direct sales to task force-designated critical facilities, including those in the medical, transportation, public services, agriculture, fisheries, livestock and essential goods manufacturing sectors. Refiners, as well as wholesale distributors, should supply volumes at levels equal to that of the same month a year earlier as a guideline, Tokyo said. The government will not intervene with contract negotiations between refiners and consumers, the official said when Argus asked whether new agreements between refiners and consumers will follow existing terms including pricing and other conditions aside from volumes. It remains unclear why the bottleneck has emerged, even though overall supply volumes across Japan should be sufficient, the official said. Meti is assessing the cause of the problem but has no plan to compile a report, as the government prioritises addressing the situation. The government will work to increase crude processing and expect refiners to strengthen their own response frameworks, the official said. Japan sold 2.5mn b/d of refined products in February, before the onset of the Middle East conflict, according to the latest data from Meti. Sales of gasoil and fuel oil averaged 543,700 b/d and 282,000 b/d, respectively. Japan sees no immediate risk of disruption to oil products in the domestic market, as it makes use of private-sector and government stockpiles and boosts alternative imports. Tokyo on 10 April decided to release an additional 20 days' worth of crude oil from its national reserves from early May, following earlier releases equivalent to 30 days from the national stockpile, 15 days from private stockpiles and six days under a joint stockpile programme with oil producing countries. Japan has sufficient oil supplies to last beyond the end of this year , prime minister Sanae Takaichi said on 7 April. In addition to petroleum products, the task force is also working to ease bottlenecks in petroleum-derived medical supplies and paint thinners. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

News

Diesel supplies to Poland's ports at record in March

09/04/26
News
09/04/26

Diesel supplies to Poland's ports at record in March

Kyiv, 9 April (Argus) — Seaborne diesel and gasoil supplies to Poland's Baltic Sea ports reached all- time highs in March, following a maintenance turnaround at the 210,000 b/d Gdansk refinery and market volatility arising from the Mideast Gulf war. Diesel arrivals were almost 776,000t in March, exceeding the record 667,000t of May 2022, Vortexa data show. State-owned Orlen, Aramco Fuels Poland, Unimot, Select Energy, BP and Oktan Energy shipped diesel to Poland's ports in March, market participants said. The first two emerged as the biggest importers, increasing purchases in March because of a planned turnaround at the Gdansk refinery, which is operated by a 70:30 joint venture of Orlen and Saudi state-controlled Aramco, and because of the uncertainty about diesel supplies from the Middle East conflict. Diesel deliveries to Gdansk surged to 308,000t in March from 54,000t in February. Market participants said Orlen imported six diesel cargoes to Gdansk last month. Deliveries to the port of Gdynia, the main import hub for independent traders in Poland, were almost 290,000t, and supplies to Swinoujscie-Szczecin accounted for 177,600t. Poland received seaborne diesel from the Amsterdam-Rotterdam-Antwerp (ARA) region, the US, Finland and Sweden. Prices for seaborne diesel on a cif Gdynia basis in the second half of March fluctuated between $96.75/t and $127.75/t cif premiums to front-month Ice April gasoil futures. Polish companies exported seaborne diesel to Ukraine, mostly from Swinoujscie-Szczecin and Gdynia. Poland sold 160,500t of diesel delivered via Polish ports to Ukraine in March from 138,000t in February, according to market participants. Cumulative diesel imports to the Polish ports were 1.34mn t in January-March, up from 730,500t in the same period in 2025. By Ivan Kudinov Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

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