BASE OILS
Market mayhem: tariffs, surcharges and trade flows
Gabriella Twining, Global Editor Base Oils, Argus Media
The base oils spot market has faced several upheavals this year, especially geopolitical, that have impacted trade flows and prices.
The escalation of tensions in the Red Sea culminating in vessel attacks remains a cause for concern especially for Group III shipments. The ongoing negotiations regarding US tariff announcements continues to impact auxiliary markets dependent on base oils and finished lubricants. Finally, feedstocks are also not exempt from disruption as factors influencing crude slates will dictate refinery output, base oil availability, and in turn spot prices.
Geopolitical tensions, Red Sea attacks Tension in the Red Sea throughout the year culminated in vessel attacks and saw delays to shipments of Group III volumes especially to Europe and the US.
Two vessel attacks in the Red Sea in early July were carried out by the Yemen-based Houthi militant group who said they would target any ship with ties to Israel. Concerns were raised for vessels travelling through the Suez Canal, especially as the Israel link was rather tenuous.
The first attack on bulker Magic Seas, sailing under a Liberian flag, last called the Israeli port of Ashdod in December 2023. The second attack on the Eternity C, also sailing under Liberian flag, last called an Israeli port in 2016.
The attacks also sent additional war risk premiums (AWRP) soaring in terms of extra insurance costs for vessels to transit the area. Argus calculated that the
48 LUBE MAGAZINE NO.189 OCTOBER 2025
increased AWRP along with Suez Canal fees totalled around $335,000 for handy size vessels who make the voyage. The price would be after the 50% no claims bonus was repaid. While those bypassing Suez via South Africa would face increased costs of around $292,000 and an additional 10 days on the voyage time.
Given the location of the three main Mideast Gulf Group III refineries in Bahrain, Qatar and Abu Dhabi are all situated east of Suez. All Group III spot shipments from these refineries, 2.2 million tonnes per year of production, heading for the US and Europe would be impacted by disruption. Further, Group III shipments from South Korea, Indonesia, and Malaysia would also be disrupted.
The Yemen-based Houthi militant group reasserted in mid-July that it would target shipping belonging to companies that do business with Israeli ports, regardless of nationality. The group said it would target ships “in any location within the reach of our
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