Argentina’s February Base Oils Supply Falls, Limiting Buffer

Argentina’s base oils supply fell to a three-month low in February, leaving fundamentals balanced but stocks lean ahead of global supply disruptions that emerged in March.

Total supply, or output and imports combined, fell to less than 12,500 cubic meters (11,000 tonnes) in February, sliding 31% year on year and for the fourth time in five months, Ministry of Economy data showed.

Lower supply offset weaker demand during the same period, leaving fundamentals relatively balanced.

Lean stocks limited exposure to any further slowdown in consumption but left the market less prepared for the tightening in global availability from March.

Key Highlights

·         February base oils output fell below 8,000 cubic meters for the third time in four months, after a refinery fire affected output late last year, and remained below typical monthly volumes of close to 11,000 cubic meters.

·         Imports of less than 5,000 cubic meters stayed lower than usual, with shipments from the US accounting for almost all the supplies.

·         Domestic production accounted for 63% of Argentina’s total supply, down from 66% in 2025 but up from 60% in 2024.

·         Lubricants demand fell 6% year on year, dipping for the third time in four months amid weaker industrial oils consumption.

·         Base oils exports of 2,000 cubic meters recovered from a slump during the previous three months, with the supplies moving to Nigeria.

Market Repercussions

Argentina’s lower base oils output and imports, combined with the resumption of exports, pointed to ongoing concern about extended demand weakness and pressure to avoid a build-up of surplus supply.

The demand weakness and the availability of some export volumes instead left Argentina better positioned to manage any change in base oils trade flows as blenders in markets such as the US and Europe sought to cover a slump in Group III base oils availability.

Rising supply self-sufficiency further cushioned the impact of tightening global markets.

Even so, structural risks remained. A lack of domestic premium-grade base oils production and reliance on the US for most imports left Argentina exposed to any slowdown in flows from that market.

Any move by domestic refiners to maximise motor fuel output over base oils could further increase Argentina’s need for overseas supplies.