01 Development of Low-Viscosity Base Oils for Fuel-Efficient Lubricants The group II and III base oil market analysis shows that the need to improve fuel efficiency and reduce friction losses encourages lubricant manufacturers to develop low-viscosity engine oils. This transition supports the use of advanced base oils that maintain lubrication performance while allowing engine components to move with less resistance. For example, ADNOC offers Group III base oil grades such as ADbase 4cSt for high-performance engine applications, demonstrating the availability of base stocks designed for modern lubricant formulations.
02 Shift Toward Group II and III Base Oils in Response to Stricter Emission Standards Stricter vehicle efficiency requirements and the need to control exhaust emissions encourage lubricant manufacturers to use Group II and III base oils in advanced engine oil formulations. This transition supports the development of lubricants with improved oxidation stability and lower-viscosity options. The U.S. National Highway Traffic Safety Administration issued a revised corporate average fuel economy rule in September 2026, updating fuel economy standards for passenger cars and light trucks across model years 2022–2031.
01 Oxidation Stability and Compressor-Turbine Lubrication Drive Market Need for oxidation stability in industrial lubricants supports demand for Group II and III base oils because their refined composition can help resist oil degradation under suitable operating conditions. Industrial gearboxes and hydraulic systems require lubricants that maintain their properties during extended operating cycles. These maintenance requirements support the use of higher-quality base oils and encourage suppliers to provide consistent formulations for industrial applications.Demand for reliable lubrication in compressors and turbines supports use of Group II and III base oils. These properties help lubricants protect moving components and maintain reliable operation under demanding temperature and pressure conditions. Industrial air compressors require lubricants that resist oxidation and deposit formation, while turbine systems need oils that retain their properties over extended service periods.
01 Limited Feedstock Availability and High Energy Consumption Restrain Market Expansion Limited availability of suitable feedstocks can constrain Group II and III base oil production because these oils require appropriate petroleum fractions and consistent feedstock quality for advanced refining processes. The International Energy Agency reported in June 2026 that global refinery crude throughput was forecast to decline by 2 million barrels per day to 82 million barrels per day in 2026, reflecting supply disruptions and reduced feedstock availability. High energy consumption during base oil production can increase operating costs because advanced refining processes require substantial energy for heating, separation, and hydroprocessing. These energy requirements, combined with fuel and electricity price fluctuations, can reduce profit margins and discourage investment in refinery upgrades.
01 Specialized & Higher-Value Base Oil Grades and Development of Base Oils for Electric Vehicle Drivetrain Lubricants Open New Avenues Base oil producers can pursue higher-value opportunities by supplying grades tailored to specific viscosity and performance requirements rather than competing solely on commodity pricing. Group III grades for premium engine oils and selected industrial applications provide one route to product differentiation, particularly when supported by technical service and customer-specific formulation assistance.Lubricant formulators and EV component manufacturers can explore Group III base oils as components in specialised transmission and e-axle fluids, often blended with synthetic esters or other base stocks. This creates opportunities to develop lubricants that reduce frictional losses and support efficient drivetrain operation.
October 2026 HPCL awarded Technip Energies an engineering, procurement and construction contract for major units under its Mumbai refinery's Lube Modernization and Bottoms Upgradation (LMBU) project.
October 2026 CPCL laid the foundation stone for a Group II/III lube oil base stocks project at its Manali refinery in Chennai.
June 2026 Vertex Energy announced a project to add 6,000 barrels per day of conventional Group III base oil capacity at its Mobile, Alabama refinery.
April 2026 Aster Chemicals and Energy and Puraglobe signed an MoU to evaluate a potential base oil production facility at Saudi Arabia's Jazan Refinery and Petrochemical Complex.