US’ June Base Oils Imports Stay Low For Second Month

US base oils imports stayed unusually low for a second straight month in June, deepening the Group III supply squeeze as buyers in the US and other major markets competed for fewer overseas barrels.

Imports rose to just under 700,000 barrels (98,000 tonnes) from less than 575,000 barrels in May, US Census Bureau data showed. June imports were still the second-lowest since June 2020, remaining well below the monthly average of around 1.4 million barrels in the year to April.

Group III base oils typically account for around 90% of the volume, reflecting the US’ reliance on overseas markets to cover its requirements for the premium-grade supplies.

Middle East shipments remained almost halted for a second month in June following the pause in flows from the region since the end of February.

The loss of Middle East supply is being felt in the US and beyond. The region was a major source of Group III base oils for major markets worldwide, and its absence has left US, European and Asian buyers competing for supplies from South Korea, Malaysia and other refiners.

South Korea and Malaysia both stepped up shipments to the US in the second quarter, but the supplies were insufficient to cover the shortfall.

The disruption also increased the importance of Canada, which accounted for almost 20% of US imports in the first half of this year.

Key Highlights

·         US base oils imports fell 41% year on year in the second quarter to 2.50 million barrels, the lowest quarterly volume since the third quarter of 2020.

·         Middle East shipments accounted for less than 6% of US imports in the second quarter, compared with more than 40% in the three years to 2025.

·         South Korea’s second-quarter shipments to the US rose to their highest since the fourth quarter of 2024, while Malaysia posted its highest quarterly volume in more than a decade.

Market Repercussions

A pick-up in imports from the Middle East is unlikely any time soon. Shipments would take more than a month to reach the US even after the Strait of Hormuz reopens and normal flows resume.

Alternative suppliers have been unable to replace the Middle East volumes, leaving US buyers competing for a smaller pool of Group III supply.

The shortfall could widen further in 2027 if Middle East flows fail to recover to typical levels and the Mississauga plant closure in Canada goes ahead as planned.

The supply gap is already pushing Group III prices sharply above other base oils grades and increasing the use of alternative grades where formulations allow.

Group III supply remains short, raising the prospect of shortages in certain lubricants, including top-tier passenger car motor oils, where there is less flexibility to substitute.