armed forces” caused handy size movements through the canal to drop from an average of 153 vessels per month in 2023 to 23 and 26 vessels per month in 2024 and 2025 respectively, Kpler data show.


Trump tariff tensions The complicated picture surrounding US tariffs caused no end of upheaval in the geopolitical sphere. Base oils and finished lubricants, as refined oil products, were exempt from the initial announcements. But there were knock on effects impacting demand from products that were included in the tariffs such as imports of cars, automotive parts, and chemicals.


Tariffs varying between 10-25% on foreign cars and auto part imports was implemented then amended throughout the year. Though the Trump administra- tion offered some rebates to offset the tariffs until 2027 to spur increased US auto manufacturing, it fails to account for the cross-border trade between the US’ closest neighbours, Mexico and Canada. Auto parts can cross the border up to eight times before a car is assembled and would be hit every time with the tariff, increasing costs considerably.


Other car manufacturing countries such as the UK would also lose a key export outlet. The US is the second largest market for UK-manufactured cars in 2024 and worth an estimated £7.6 billion, data from the Society of Manufacturers and Traders show.


Vehicle production estimates in North America were revised down for 2025 to 14.7 million units, compared to 15.4 million units in 2024, data from automotive original equipment manufacturer Magna International show. The increased costs further compounded a downward trajectory in US finished lubricant consumption particularly at the factory fill.


Finished lubricant demand in the US has been weighed down by a weak economic outlook and blenders have been incentivised to keep inventories lean. Purchasing has been mostly on an as-needed basis and prices kept low. Tariffs further hindered demand as the outlook continues to be uncertain.


Adding the additive package surcharge Another knock-on effect of the tariffs was that they highlighted how globalised the supply chain is for the manufacturing of additive packages. Several additive manufacturers applied tariff surcharges accounting for


around a 1% increase on all additive packages in the aftermath of the tariff announcements in April. The global nature of the supply chains were cited as a reason behind the increase as certain additive packages are comprised of tens of components from different locations. The increased costs associated with the movement and import of additives needed to be accounted for.


Some additives manufacturers are now looking to localise their supply chains to simplify and future- proof themselves. But in the short term, increased costs are passed along to the buyer and finished lubricant manufacturer.


US tariffs spur China PAO demand As refined oil products, base oils and finished lubricants are exempt from US tariffs but chemicals have not been spared. Polyalphaolefins (PAO) are included and despite the reduction in reciprocal tariffs between China-US, falling to 10-15% and 30% respectively, Chinese buyers sought to secure European supplies over those of US origin.


Chinese buyers are still priced out of US-origin PAO and so turned to Europe for their needs. As such, PAO availability curbed and buyers looked to alternatives such as Group III+ and Group III with additives to make up the shortfall.


Base oil yields in question as crude flows develop A key impact of the tariffs is how they are affecting base oil feedstocks and look to disrupt typical trade flows, especially in Asia.


At the time of writing, the Trump Presidency threatened India with higher tariffs to discourage its imports of Russian oil. India is heavily dependent on Russian imports and sourced 37% of its crude in the first six months of the year, Kpler data show.


Indian refineries were incentivised to increase imports from the Middle-East Gulf, currently accounting for 40% of its crude intake for January-June. But they are already importing essentially the maximum that they can.


Indian refiners have increased spot purchases of US crude in August, in a bid to mitigate the tariff threat. Several tenders were announced for September to October delivery totalling 10.5 million barrels, well above the usual 1-2 million barrels typically purchased by the state refiners.


LUBE MAGAZINE NO.189 OCTOBER 2025 49


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