In the last twenty years the global base oil industry has faced a profound transformation. Refiners have steadily reduced their reliance on API Group I production in favor of Group II and, more recently, Group III grades. This shift has been driven by the rising demand for higher-performance lubricants in modern automotive and industrial applications, alongside growing emphasis on sustainability.
Base oils demand in tonnes remains largerly flat, but in value is growing 2-3% (adjusted on typical inflation in USD) due to switch to high quality Group II, II+ and III base oils.
Regional capacity
-
United States capacity stagnated for years but is now rebounding. While the country remains focused on Group II, their attention also shifts toward Group III.
As for early 2022, re-refined base oil capacity in the United States was close to 875,000 t/y, largely consisting of Group I products.
- Western and Central Europe have closed most of their Group I refineries while adding two large Group II/III plants that now underpin regional output.
- South Korea grew rapidly during the past decade but has stabilized, suggesting a balanced market.
- Japan has seen a steady decline in domestic capacity. Recent closures, including Eneos’ Group I plant in 2023, highlight the challenges. To maintain relevance, Japan has turned to overseas investments.
- Middle East refiners have transformed the region into a powerful global hub for Group III production, supported by major infrastructure upgrades and export-oriented strategies.
- Russia experienced a sharp drop in Group I capacity but has partially recovered by investing in Group II and III facilities.
- China has seen the most dramatic growth, evolving rapidly from Group I to Group II and now standing as a major producer of Group III oils.
-
Group I: Previously dominant Group I continues to decrease. Closures, such as Eneos in Japan and Sapref in South Africa in 2023, illustrate its decline. It is being slowly displaced by Group II, which offers lower costs and higher performance.
Tight conditions in the Group I segment in the first half of 2025 are getting more stabilized.
Heavier grades became more available after maintenance was completed at several plants, including Calumet, American Refining Group, and Ergon.
Bright stock supply remained limited not only in the U.S. but also in other regions, as recent permanent plant closures and temporary shutdowns restricted volumes.
-
Group II: The most working Group II has absorbed much of Group I’s market share. The opening of ExxonMobil’s Rotterdam unit in 2019 boosted Europe’s capacity significantly.
In the first half of 2025, Group II supply was expected to grow as major plants resumed production after maintenance. Earlier shutdowns at Chevron, Motiva, and Ergon, together with reduced operations at Excel Paralubes, had limited the availability of Group II oils on the spot market.
-
Group III: Expansion is strongest in East Asia and the Middle East, while uptake in North America remains limited as refiners focus on Group II.
As for 2025 most of the Group III base oils used in the U.S. are imported from Canada, Asia, and the Middle East. But shutdowns in those regions reduced the amount available on the spot market. U.S. producers also lowered their output, which made the overall supply even tighter. In 2025 U.S. companies are building up extra stocks of oil because of the hurricane season. At the same time, global supply is still quite limited.
Base oils groups сapacity
Largest base oil refineries 2025
| Company | Location | Capacity (b/d) | API Group(s) |
|---|---|---|---|
| ExxonMobil (Jurong Island) | Singapore | 51900 | II |
| ExxonMobil (Baytown) | Texas, USA | 32000 | I, II (+III project 8 kb/d) |
| Chevron (Pascagoula) | Mississippi, USA | 25000 | II (+III/III+ planned) |
| Shell (Daesan JV) | Daesan, Korea | 25000 | II (III by 2027) |
| Shell (Pearl GTL JV) | Ras Laffan, Qatar | 28000 | II, III |
| Saudi Aramco – Motiva | Texas, USA | 40300 | II (III grades added) |
| Saudi Aramco – S-Oil | Ulsan, Korea | 44700 | I, II, III |
| Saudi Aramco – Luberef | Yanbu & Jeddah, Saudi Arabia | 12000 | I, II, III |
| GS Caltex | Yeosu, Korea | 30000 | II, III |
| Hyundai (Daesan JV) | Daesan, Korea | 25000 | II (III by 2027) |
| ADNOC (Ruwais) | Ruwais, UAE | 12000 | II, III |
| Ergon (Vicksburg/Newell) | USA | 26500 | Naphthenic / Group I |
| Petronas (Melaka) | Melaka, Malaysia | 5600 | II, III |
| SK Enmove (Ulsan) | Ulsan, Korea | 26000 | III |
| SK Enmove (ILBOC Spain JV) | Cartagena, Spain | 12600 | II, III |
| Excel Paralubes (P66 JV) | Westlake, Louisiana, USA | 22000 | II |
| Avista | Kalundborg, Denmark (re-refinery) | 2500 | Re-refined Group I/II |
| Puraglobe | Germany/USA (re-refineries) | 4000 | Re-refined Group II/III |
