Americas/EMEA base oils supply outlook: Week of 3 November

·         US Group II base oils price-premium to vacuum gasoil (VGO) holds firm.

·         Firm price-premium vs VGO contrasts with falling price-premium this time a year ago.

·         Firm price-premium incentivizes refiners to maintain or raise output.

·         Any such moves could magnify pick-up in supply following expected completion of Group II plant-maintenance work in H1 Nov 2025.

·         US’ firm Group II export prices relative to domestic prices could reflect more limited volume of surplus supply.

·         US' firm Group II export prices could instead reflect even higher prices in overseas markets like Europe and India.

·         Higher prices in overseas markets sustain arbitrage opportunities without need for further fall in US export prices.

·         Regular flow of US shipments to India in recent months points to such a trend.

·         Dynamic would change if prices in overseas markets fell more sharply.

·         Any such sharp fall in prices in overseas markets looks unlikely for now, especially for light grades.

·         US Group III base oils supply set to get boost from arrival of wave of shipments from Bahrain in late-Nov 2025 and early-Dec 2025.

·         Pick-up in cargo flows from Middle East contrasts with slowdown in shipments from South Korea to US in recent weeks.

·         Latin America’s base oils supply shows more mixed signals.

·         Brazil’s base oils supply recovers in Sept 2025 as rebound in imports cushions impact of extended slowdown in domestic output.

·         Dynamic highlights importance of imports in covering most of Brazil’s base oils requirements.

·         Imports account for close to 60% of Brazil’s supply in Q3 2025 and in year to September.

·         Any extension of recent drop in domestic output into Q4 2025 could increase Brazil's reliance on imports to meet requirements.

·         Any such pick-up in requirements could help to remove surplus supplies from US.

·         Any such pick-up in requirements could also be muted as buyers aim to maintain lower stocks.

·         Any such pick-up in requirements could also be muted in view of limited fall in Brazil’s base oils output.

·         Argentina’s base oils supply rises in Sept 2025 to highest in almost four years.

·         Rise in supply mostly reflects surge in arrival of shipments from US in Sept 2025, triggering jump in imports.

·         Surge in shipments from US to Brazil and Argentina helps to clear surplus volumes from US in Aug 2025.

·         Repeat of that wave of shipments, at least to Argentina, could be harder as the country first works down its high stocks.

·         Europe’s base oils supply likely to be readily available in face of muted demand, limited arbitrage opportunities and recovery in Group III flows from Middle East.

·         Size of Group I surplus supply could be more manageable following signs of recent removal of some of those volumes, as well as unexpected production issues.

·         Singapore takes delivery in past week of unusually large shipment of base oils from Europe.

·         Arrival of shipment at end-Oct 2025 suggests it left Europe around mid-Sept 2025.

·         Shipment consists mostly of Group I base oils.  

·         Supplies originate from several different and infrequent sources, including Poland.

·         Shipment moves to Singapore despite start-up of new unit in the island-state in Sept 2025.

·         Europe's Group III base oils supply could be more mixed.

·         Recent or imminent arrival of shipments from Middle East contrast with slowdown in cargoes from Spain to northwest Europe in recent weeks.

·         Spain’s premium-grade base oils exports to northwest Europe fall to four-month low in Oct 2025.

·         Dip in flows coincides with signs of slowdown or pause in shipments from Indonesia to Europe in Oct 2025.

·         Nigeria’s base oils supply likely to get a boost as growing wave of Group I shipments heads to or reaches the country.

·         Shipments include cargoes from US, Argentina and southern Europe, with most of the volume set to arrive in the coming weeks.

·         Shipments would help to replenish depleted stocks after slowdown in flows to Nigeria in Q3 2025.