March 2026 – Market and Base Oil Updates

OUR OBSERVATION

Dear Readers,

March didn’t gradually shift. It snapped into a different market.

What started as a steady environment quickly turned into a tightening supply situation where availability became the primary concern. Conversations changed fast. Buyers who had been patient were forced back into the market, and suppliers moved just as quickly to protect barrels.

This month wasn’t about finding the best price. It was about finding product and identifying alternate supply, especially within the Group III space.

Between rising feedstock pressure, refinery run cuts, and ongoing disruption tied to the Middle East, on top of a sharp increase in crude costs cascading to base oil cost in like step. The market made one thing clear; Barrel sales are being closely managed while costs continue to move at a rapid pace.

Let’s walk through what we saw.

Quick Highlights – Group I, Group II, and Group III

March was defined by two things: tighter supply and rising cost.

Feedstock costs surged, refinery economics shifted, and producers responded by pulling back. Spot offers thinned out quickly, and many suppliers, particularly in the Group III space, moved into allocation, prioritizing term commitments and limiting additional volume. This was not isolated tightening. This was a structural shift across the system.

Group I tightened as the month progressed, but it remained the most manageable of the three groups. Light grades held early stability before moving higher, while heavier cuts and bright stock followed as availability became more controlled with some refiners. Export activity slowed as refiners focused on protecting domestic positions and honoring contractual obligations. The market moved from balanced to tight, but it did not reach the level of restriction seen in the other groups.

Group II, however, shifted aggressively.

What had been a comfortable market quickly turned into one where barrels were no longer easy to secure. Refiners began managing supply more closely, in some cases holding buyers strictly to contract volumes. 100N tightened first, but 220 and 600 followed right behind, not gradually, but decisively. Buyers who had been waiting for better opportunities were forced to step in, often finding that flexibility had already disappeared.

This is no longer a long Group II market. It is tight, controlled.

Group III is where the pressure is most visible.

With disruptions limiting flows out of the Middle East and global supply chains tightening, availability has become extremely constrained resulting in a short market IE Allocations. U.S. and European producers have moved firmly into a more an allocation sales environment, and securing volume, especially in 4cSt and 6cSt, has become in short difficult.

Heavier grades are following, but the core message is clear. Group III is short and firmly on allocation.

The Key Takeaway This Month – This is not a temporary squeeze or a pricing cycle. This is a supply-driven market shift. Barrels are controlled. Allocation is active in some spaces. And the margin for waiting is gone.

Closing Remarks:

As we move into April, the message remains straightforward.

Supply is tight. Allocations where applied are real. And the market is not offering much flexibility.

Buyers who stay ahead of their positions will be in a far better place than those trying to react late. Refiners are not signaling a near-term return to open availability, and ongoing feedstock uncertainty continues to support the current structure.

This is a market that requires planning, communication, and decisiveness.

RECENT HEADLINES

U.S. REFINERIES

Fire at Valero refinery in Port Arthur extinguished; shelter-in-place lifted, some schools delayed

PORT ARTHUR, Texas — An explosion and large plume of smoke at the Valero refinery in Port Arthur prompted officials to order west-side residents to shelter in place Monday, but the major fire was out by early Tuesday and the shelter-in-place order was lifted, Jefferson County Judge Jeff Branick announced.

Air monitoring by Valero, the local Port Arthur fire department, and TCEQ shows no concerns for air quality according to a news release from Valero. Continue Reading Here

Chevron threatening to leave California

Chevron said it is threatening to close its oil refineries in California due to overregulation, which the oil company said is contributing to price spikes amid the war in Iran.

Due to California’s taxes, emissions rules and other regulations, which hit gas costs harder than in many other states, the price per gallon is well over the national average. Continue Reading Here

Gas prices surge as LA council confronts fallout from Phillips 66 refinery shutdown

Pain at the pump and pink slips piling up — Los Angeles is getting crushed from both sides.

A Phillips 66 refinery shutdown is now hitting in real time, slamming drivers with sky-high gas prices while gutting local jobs and squeezing an already fragile fuel supply.

Regular gas has blasted past $8 a gallon, turning everyday commutes into a financial hit for millions of Angelenos all after a key piece of the region’s energy backbone went dark. Continue Reading Here

NON U.S. REFINERIES

Iranian drones force shutdown of Saudi Arabia’s largest oil refinery

The Ras Tanura complex houses one of the Middle East’s largest refineries with a capacity of 550,000 barrels per day and serves as a critical export terminal for Saudi crude oil. Saudi Arabia’s state oil giant Aramco shut its Ras Tanura refinery following a drone strike, an industry source said on Monday, after Tehran launched strikes across the region in response to the US-Israeli attack on Iran.

The Ras Tanura complex, on the kingdom’s Gulf coast, houses one of the Middle East’s largest refineries with a capacity of 550,000 barrels per day (bpd) and serves as a critical export terminal for Saudi crude oil. Continue Reading Here

Bahrain’s Bapco announces force majeure on operations

Bapco’s 380,000 barrels per day (bpd) Sitra refinery buys Saudi crude via a pipeline between the two countries, depriving Saudi Arabia of another outlet for its production.

Bapco is a major exporter of fuels including diesel, ⁠jet fuel and naphtha to countries in the Middle East and Asia.

Its refining capacity was recently increased to 380,000 bpd, ⁠from 265,000 bpd.

Bapco said that all domestic market needs remain fully secured and supplies ⁠will continue without disruption, supported by proactive plans in place.  Continue Reading Here

Drone hit sparks fire at major ADNOC refinery in Middle East, unit shut ‘as precaution’

The violence in the Middle East intensified on Tuesday as fire broke out at a facility within the Ruwais industrial complex in Abu Dhabi following a suspected drone strike, prompting state oil giant ADNOC to shut down its refinery as a precaution, Reuters reported quoting a source familiar with the matter.

Authorities in Abu Dhabi confirmed that they were responding to a fire at the facility after a drone attack. The emirate’s government media office said emergency teams were quickly deployed and no injuries were reported, though officials did not specify the facility within the complex that was affected.  Continue Reading Here

THE CRUDE SIDE

U.S. to release 172 million barrels of oil from Strategic Petroleum Reserve as prices surge

Energy Secretary Chris Wright said Wednesday that the United States will release 172 million barrels from the Strategic Petroleum Reserve as part of the International Energy Agency’s efforts to combat steep oil prices amid the Iran war. Continue Reading Here

Could the US really release more of its strategic oil reserves?

The Trump administration, which definitely carefully planned its war on Iran and thought through all the potential implications, seems to be getting increasingly worried about the completely unforeseeable rise in gas prices.

After all, pump prices are now approaching the $4 a gallon level that many Americans consider a naked affront to all that is holy and good in the world. We’ve seen various desperate measures to tame the rise, like suspending the Jones Act, easing sanctions on Russian and possibly even accepting Iranian oil. Continue Reading Here

The Saudis found an escape hatch for some of the world’s oil. The Houthis could slam it shut

London — The world, hungry for oil, got a modest reprieve earlier this month when Saudi Arabia began diverting millions of barrels of crude —ordinarily destined for ships transiting the blockaded Strait of Hormuz — to its Red Sea port of Yanbu.

But over the weekend Iran-backed Houthi militants entered the war in an escalation that threatens to sever even that lifeline. Continue Reading Here

Oil-thirsty Asian nations seek Russian crude as Iran war strains supplies

BANGKOK (AP) — Asian nations are increasingly competing for Russian crude oil as an energy crisis mounts amid the month-old war by the U.S. and Israel against Iran, which has choked off roughly a fifth of the world’s oil supply.

Much of the oil from the mostly shut Strait of Hormuz was headed for Asia, hit hardest by recent energy shocks. Over the weekend, Iran-backed Houthi rebels entered the conflict, further threatening shipping. Continue Reading Here

Surprising Fun Facts About the Oil Industry

1. The First Oil Tank Was a Converted Wine Vat – Early refiners stored oil in whatever they had—some of the first bulk storage tanks were literally repurposed wine vats before steel tanks became standard.
2. Oil Was Once Transported by River Barges Before Rail Took Over – In the 1860s, crude oil in Pennsylvania was floated down rivers in wooden barges before pipelines and railroads became dominant.
3. The First Oil Boom Created the World’s First Environmental Lawsuits – Farmers near early oil fields sued drillers for contaminated water and land damage—some of the earliest recorded environmental legal cases.
4. Early Refineries Exploded Frequently – Before safety standards, early refineries were so dangerous that explosions were commonplace, leading to the first industrial safety protocols.
5. Oilfield Workers Created Their Own Currency Systems – In remote boomtowns, workers were sometimes paid in company-issued tokens or credit, redeemable only at local stores.
6. The First Oil Maps Were Hand-Drawn From Surface Clues – Before seismic tech, geologists used seeps, rock color, and even smell to map potential oil zones—often sketching maps by hand.
7. The Word “Wildcatter” Comes From Literal Wildcat Hunts – Drillers working in unknown territory were called wildcatters because they operated in remote areas where wildcats roamed.
8. Early Oil Wells Used Salt Drilling Equipment – The first oil wells weren’t designed for oil—they reused tools meant for drilling salt brine wells, which is how oil was initially discovered.
9. Some Oil Was Shipped in Glass Bottles – Before standardized containers, refined oil like kerosene was sometimes sold and transported in glass bottles, like liquor.
10. Oil Discoveries Often Followed Water Wells – Many early oil strikes happened accidentally when drilling for water, especially in Pennsylvania and Ohio.

SUGGESTED READING

“Mr Five Per Cent: The Many Lives of Calouste Gulbenkian, the World’s Richest Man” by Jonathan Conlin

The man who quietly took a cut of the world’s oil. In The Desert King: The Secret Life of Oil Tycoon Calouste Gulbenkian, Jonathan Conlin tells the remarkable story of the elusive dealmaker known as “Mr. Five Percent.” Operating behind the scenes, Gulbenkian helped shape the earliest Middle Eastern oil concessions and mastered the art of staying indispensable to every deal. It’s a fascinating look at how one strategist

WE’VE COME A LONG WAY! 

Thank you for joining us in this edition of the Beyond the Barrel Newsletter. Feel free to reach out to the Signal Fluid Solutions team for any inquiries or discussions.