Argentina’s Base Oils Supply Flips Back To Surplus In May

• Argentina's base oils supply returned to surplus in May as imports rebounded and domestic demand weakened after March-April's stock-building surge

• Base oils inventories recovered close to multi-year highs in May

• The rapid recovery pointed to sufficient supply and increased the likelihood of exports resuming as buyers work down inventories

Argentina's base oils market returned to surplus in May as imports rebounded and demand eased, reversing the temporary supply deficit created by disruption-driven buying during March and April.

Total supply rose to around 20,000 cubic metres (17,800 tonnes) in May, climbing from 12,000 cubic meters in April to a four-month high, Ministry of Economy data showed.

Supply got a boost from both stronger domestic production and a recovery in imports.

Output held at a four-month high of around 11,800 cubic metres. Imports climbed to more than 8,200 cubic metres, up from around 3,000 cubic metres in March and April combined.

The increase in supply contrasted with weaker domestic demand following the unwinding of disruption-driven stock-building, allowing the market to swing back into surplus within a month.

Key Highlights

• Supply exceeded demand for the first time in three months, producing the largest surplus in four months.

• Domestic production accounted for 59% of total supply, down from 95% in April as imports recovered strongly.

• Production still accounted for 71% of January-May supply, well above 2025 and 2024 levels, pointing to Argentina's relatively high degree of self-sufficiency.

• Base oils inventories recovered close to multi-year highs after falling to a six-month low in April, while combined base oils and lubricants stocks climbed to a seven-month high.

Market Repercussions

The rapid return to surplus showed that Argentina's supply shortfall was driven more by a temporary surge in demand than by an inability to secure supply. The shortage was never structural.

Higher imports, firm domestic production and easing demand restored the market balance within a month, leaving inventories rebuilding as concern over supply disruptions faded.

The shift left buyers and distributors holding larger stocks and curbed their incentive to sustain procurement at March and April’s pace.

The change also improved the prospect of a resumption of cargo-sized base oils exports, just as stock-building began to unwind in other disrupted markets.