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Global base oils supply rose to a four-year high in 2025, with fourth-quarter volumes the highest for that period in four years
Sustained supply growth during the second half of 2025 left the market positioned for oversupply in 2026 before the Middle East conflict reversed those expectations
A pause in Middle East shipments and growing pressure on regional output could tighten base oils availability across grades in the coming weeks
Global base oils supply rose to a four-month high in December, lifting full-year 2025 volumes to a four-year high even before a wave of new production capacity is set to come onstream over the coming year.
Total global base oils supply rose to more than 2.90 million tonnes in December, up from less than 2.85 million tonnes in November and 9% higher year on year, according to data from EIA, METI, Ministry of Energy and other government sources.
The sustained rise in supply during the second half of 2025 preceded expectations of oversupply in 2026 as new refining capacity ramps up.
Those expectations flipped to concern about unexpected tightness as the Middle East conflict curbed base oils shipments from that region and raised the prospect of lower output across Asia and Europe.
Key Highlights
· Fourth-quarter base oils supply came to around 8.50 million tonnes, the highest fourth-quarter volume in four years as higher output in Asia and the Americas offset a decline in Europe.
· Full-year 2025 base oils supply came to more than 33.0 million tonnes, edging up slightly from 2024 to a four-year high.
· Europe’s share of 2025 supply fell below 13.5%, the lowest in at least five years, amid a multi-year decline in Group I output and subdued demand growth.
· The Americas’ share of full-year supply held in a narrow range over the last five years, even as output slipped by 2% from 2024.
· Asia’s share of full-year supply edged up to more than 33%, remaining below levels in 2022 and 2023 as refinery plant closures cut output.
· China’s share of total supply climbed to a four-year high as output recovered closer to pre-pandemic lockdown levels.
Market Repercussions
The prospect of further supply growth in 2026 had incentivized blenders to maintain leaner stocks and to procure top-up supplies more frequently.
Rising supply also raised expectations of downward pressure on base oils margins.
Those underlying supply fundamentals left the market unprepared for this month’s pause in base oils shipments from the Middle East, which has mostly affected Group III supplies.
The effect could extend to other grades and other regions in the coming weeks as surging diesel crack spreads and disruption to crude oil shipments put pressure on refiners to cut base oils output.
