U.S. Lubricants Market Faces Margin Pressures Amid Prolonged Price Stability and Weak Demand
By Thomas F. Glenn, JobbersWorld
The U.S. lubricants market has seen nearly two years of price stability for finished lubricants, with no major price increase announcements since Q4 2023. This follows significant volatility in 2021 and 2022, when post-COVID supply chain disruptions drove multiple base oil and additive price surges, forcing blenders to raise finished lubricant prices an unprecedented number of times.
Today, however, the market is facing sustained downward pricing pressure, fueled by heightened competition and soft demand. A previously published report in JobbersWorld indicated that U.S. lubricant demand declined by approximately 6% in 2024 compared to the prior year, with consumer automotive lubricants falling nearly 9%—a trend attributed to extended oil change intervals and the growing adoption of electric vehicles. These headwinds have continued into the first half of 2025, posing ongoing challenges for lubricant blenders across the country. Price pressure is being further exacerbated by one major oil company reportedly offering second-tier lubricants at prices that some blenders say are at—or even below—their cost of goods sold.
While blenders have limited room to reduce prices, buyers demand substantial discounts to switch suppliers, often unfeasible without sacrificing profitability or cutting back on value-added services. As a result, many blenders report focusing on retaining existing business rather than pursuing aggressive growth, pricing their products at the lowest sustainable levels. To manage costs, they are intensifying negotiations with base oil, additive, packaging, and other input suppliers. Although some additive vendors have reportedly offered modest price concessions, most base oil and additive suppliers remain firm, citing stabilized raw material costs and their own margin constraints.
Compounding challenges, base oil supply is currently constrained due to refinery turnarounds for maintenance, limiting availability and keeping costs elevated. Once turnarounds conclude, likely by mid-2025, increased base oil supply could ease pricing pressures, potentially allowing blenders to negotiate better terms, depending on market dynamics and demand recovery.
Taken together, these factors point to a difficult operating environment for lubricant blenders in 2025—marked by weak demand, intense price competition, and limited cost relief from suppliers. With margins under continued pressure, many blenders are being forced to recalibrate their commercial strategies, shifting focus from expansion to preservation. The path forward will likely depend on a combination of base oil supply normalization, potential demand recovery, and disciplined pricing strategies. Until then, the industry remains in a precarious balance, where even modest shifts in supply or demand could significantly influence market stability and profitability.