Why Are Global Oil Prices Falling, but Lubricant Prices Aren't?

Why do global oil prices decrease while lubricant prices do not?

To clarify the issue, as everyone knows, global crude oil prices have been declining since January this year due to the pressures from the Covid-19 pandemic originating in China, forcing the country and several others to shut down numerous factories and halt transportation. However, at that time, global crude oil prices were still above $60 per barrel. On March 8, Saudi Arabia proactively fired the first shot in the crude oil price war with Russia by announcing a price reduction of $6 to $8 per barrel and increasing production by an additional 1.5 million barrels per day. Immediately, prices plummeted by more than 20%. While the average person may perceive this as merely fluctuations in oil prices, it is, in fact, deeply intertwined with political dynamics and a nation's standing. The United States, in a bid to protect its Petrodollar, has pressured oil-rich countries (through attempts at coups in Venezuela, sanctions against Russia, and wars in Iraq and Libya) that seek to disrupt the Petrodollar's monopoly.

To gradually address this question, let’s briefly overview the lubricant market in Vietnam:

Currently, there are over 50 companies in Vietnam importing base oils for processing. Most of the world-renowned brands like Motul, Mobil, BP, etc., have made their presence known, capturing over 80% of the lubricant and industrial grease market in Vietnam! In contrast, domestic companies have a modest market share. This illustrates that prices for lubricants and industrial greases are largely determined by these major brands. So, why do some brands not lower their prices, and even slightly increase them, despite a significant drop in the import price of base oils?

The answer lies in the scale and industry components of major brands like Repsol, Motul, Castrol, Shell, Total, and Caltex. Why is that so?

In terms of scale, these are multinational corporations with business and production operations that nearly span the globe, not limited to any single country or territory. Their business sectors are also quite broad, encompassing exploration, drilling, and global supplies of crude oil, base oils, and additives. A common misconception when addressing this issue is that base oil prices are directly linked to crude oil prices. While crude oil prices have dropped sharply, leading to a significant decrease in products derived from crude oil, such as gasoline and diesel, base oils are produced independently by these companies. Therefore, a drop in crude oil prices does not benefit their input costs, as they are not importing