US’ December Base Oils Exports Surge to Europe, South America

US base oils and lubricants exports to Europe and South America surged simultaneously in December, lifting combined shipments to their second-highest level in eighteen months and partially cushioning the impact of a downturn in flows to Mexico.

Total exports to the two regions rose to more than 1.40 million barrels (198,000 tonnes) in December, up from less than 900,000 barrels in November, Census Bureau data showed.

The increase pushed combined shipments above the 1.40 million barrel level for the second time in three months. Before October, the last time volumes exceeded that level was in August 2024.

The abrupt pick-up in fourth-quarter flows underscored moves to redirect supplies to alternative outlets amid a sustained slump in shipments to Mexico.

Key Highlights

·         Shipments to Europe and South America accounted for 50% of total US exports in December, up from a 32% share in the first half of 2025 and the highest since late-2023.

·         Mexico’s share of total US exports fell to 26% in December, down from 45% in the first half of 2025 — almost a mirror image of the gains seen in Europe and South America.

·         Total US exports still fell by 20% in December year on year, highlighting the difficulty for other markets to fully compensate for weaker shipments to Mexico.

·         South America-bound exports rose to a four-month high in December, while shipments to Europe climbed to a three-month high.

·         The surge in combined exports reflected the unusual overlap of higher shipments to both regions at the same time.

·         Fourth-quarter base oils exports to Europe rose 58% year on year to the highest level in more than a year.

·         Fourth-quarter exports to South America rose 21% year on year to the highest since late-2023.

Market Repercussions

The December surge boosted premium-grade supplies in Europe and South America heading into early 2026, a period when demand typically faces seasonal softness.

Healthy supply and more muted demand could limit those markets’ capacity to absorb another wave of US cargoes in the near term as buyers first consumed existing stocks.

That dynamic contrasts with Mexico, which consistently absorbed even larger volumes of US base oils every month until mid-2025.

The divergence highlights the structural difficulty of replacing a large outlet like Mexico.