Americas/EMEA base oils supply outlook: Week of 6 October

·         US Group II base oils prices edge up versus vacuum gasoil (VGO) as crude prices correct lower.

·         Firm, rangebound base oils margins sustain incentive for refiners to maintain high output.

·         High output in Oct 2025 would help to cushion impact of scheduled plant-maintenance.

·         Output faces prospect of rising strongly following completion of plant-maintenance.

·         US base oils output rises to thirty-eight-month high in July 2025 following completion of plant-maintenance in H1 2025.

·         US base oils output could again rise above typical levels at year-end following completion of latest plant-maintenance.

·         Unusually strong domestic demand cushions impact of rise in output in July 2025, leaving US stocks at low levels.

·         Domestic demand unlikely to rise so strongly at year-end.

·         More muted demand, combined with rise in base oils output, would increase US refiners’ reliance on overseas markets to absorb more surplus volumes.

·         Any rise in surplus volumes at year-end would coincide with likely seasonal pick-up in surplus supply in Europe and structural rise in surplus supply in Asia.

·         Latin America’s base oils market shows signs of being well-positioned to take advantage of any rise in surplus supplies in overseas markets.

·         Brazil’s base oils supply lags demand in Aug 2025 by largest volume in more than four years.

·         Shortfall reverses gradual supply-build during most of previous four months, leaving blenders with balanced-to-tighter stocks.

·         Signs of pick-up in US shipments reaching Brazil in Sept 2025 likely eases any immediate tightness.

·         Balanced-to-tighter stocks curb buyers’ exposure to any downward price-pressure over coming weeks.

·         Balanced-to-tighter stocks give buyers leverage to tap any pick-up in availability of surplus overseas supplies at competitive prices over coming months.

·         Europe’s Group I base oils supply could remain readily available unless refiners cut run-rates.

·         Base oils margins remain at levels that curb incentive for refiners to implement such moves.

·         Europe’s Group I base oils supply rises to six-month high in July 2025, reflecting boost from completion of plant-maintenance work during preceding months.

·         Lack of any scheduled plant-maintenance work over coming months raises prospect of Group I supply holding at similar levels.

·         Steady Group I supply would increase importance of open arbitrage to outlets like South America or Middle East to place surplus volumes.

·         Recent resumption of Group I cargo shipments from Argentina instead suggests that markets in that region may add to competition rather than provide outlet to absorb surplus supply. 

·         Europe’s shipment of Group I base oils to southeast Asia could also face slowdown in coming months.

·         Singapore takes delivery of unusually large shipment from UK in past week, adding to surge in supplies from Europe in Q3 2025.

·         Shipments help to remove supplies from Europe during summer months.

·         Recent start-up of new Group II unit in Singapore could now curb requirement for additional supplies from Europe.

·         Europe’s Group II base oils price-strength points to extension of balanced-to-tight supply fundamentals the market faced in early-Q3 2025.

·         Europe’s Group II base oils supply matches fifteen-month low in July 2025.

·         Rise in Netherlands’ refinery consumption cuts further the availability of supply in July 2025.

·         Drop in Group II supply cushions impact of seasonal slowdown in Europe’s lube consumption during summer holidays, curbing build-up of surplus volumes.

·         More manageable supply curbs pressure on sellers to clear surplus volumes or to cut prices.

·         Maintaining balanced Group II supply dynamics could be more challenging over coming months.

·         Group II market faces challenge of likely slowdown in Europe’s exports to southeast Asia in coming months and prospect of rise in surplus supply in US at year-end.

·         Europe’s Group III base oils supply likely to get boost from arrival of several shipments from Middle East in H1 Oct 2025, combined with steady flows from Spain.

·         Cargo of Group III base oils from Bahrain reaches northwest Europe in late-Sept 2025, with several more shipments from Bahrain and UAE arriving in early-Oct 2025.

·         Europe’s supplies of Group III base oils with OEM approvals show signs of holding steady.

·         Spain’s premium-grade base oils exports hold firm in Sept 2025 for third month, reflecting that dynamic.