US May base oil exports to Europe surge

US base oil exports to Europe rose in May to a record high, responding to the region’s high prices and tight supplies.

Base oil exports of 768,080bl (108,180t) in May rose from an already high 641,930bl the previous month and 667,090bl in March, government data showed.

The March volume had been the second highest since 2017 and April the third highest. Now they were the third and fourth highest since then.

The surge in shipments boosted total base oil exports to Europe to 2.71mn bl in the first five months of the year. The volume was up 16pc from 2.29mn bl during the same period last year.

The rise in shipments to Europe was timely. Buyers were scouring for alternative supplies to cover for unexpectedly tight availability of Group I base oils in the region.

European Group II base oil prices relative to Group I were also at more competitive levels compared with last year.

The price levels and pick-up in availability boosted the attraction of using more Group II base oils in place of Group I.

The rise in shipments also extended beyond just Belgium. The country had typically been the destination for more than 85pc of Europe-bound US shipments in recent years.

The dynamic began to change from the start of this year.

A surge in shipments to France from the beginning of 2022 extended into May.

Exports of more than 412,000bl to the country in the first five months of the year were up from less than 2,500bl during all of 2021.

The rise in shipments followed the closure of France’s remaining Group I base oils production capacity in 2021.

Exports to the UK have also risen strongly since second-half 2021. Shipments of more than 37,000bl to the country in May were the second highest in seven years.

The EU’s import quota for Group II base oils no longer applies to the UK following its exit from the EU at the beginning of 2020.