US January Base Oils Exports To Europe, South America Extend Rise

US base oils exports to Europe rose to a sixteen-month high in January, extending a surge in flows that boosted the region’s premium-grade inventories ahead of rising demand and growing disruption to feedstock supply.

Base oils and lubricants exports to South America also extended their rise in January to a 42-month high.

Total US base oils exports to Europe rose to more than 600,000 barrels (86,000 tonnes) in January, climbing 48% year on year from an already-high 581,000 barrels in December, Census Bureau data showed.

The increase, combined with stronger flows to South America, cleared surplus volumes from the US market at a time when managing oversupply had been a major concern.

The challenge of managing oversupply has now given way to concern about securing enough volumes to sustain operations as war in the Middle East disrupted feedstock and base oils flows from the region.

Key Highlights

·         Base oils exports to Europe in December and January combined rose to close to 1.20 million barrels, the highest two-month volume in 25 months.

·         Base oils and engine oil exports to South America climbed to close to 1.10 million barrels in January, the highest since mid-2022.

·         Engine oil exports to Brazil rose to a five-year high, while shipments to Argentina reached the highest in at least eight years.

·         Europe and South America together accounted for 61% of US base oils and engine oil exports in January, up from an already-high 50% in December and the highest in more than three years.

Market Repercussions

The large shipments to Brazil and Argentina helped offset for another month the impact of a prolonged slowdown in US exports to Mexico.

Even so, the sporadic nature of the shipments to South America pointed to the absence of a consistent long-term replacement for volumes previously moved to Mexico.

The challenge of finding outlets for surplus volumes has now reversed.

Disruption to base oils and feedstock flows raised demand for alternative supply, transforming the dynamic for US exporters.

The surge in US shipments to Europe in late 2025 and early this year had raised the prospect of a growing supply overhang in that market.

Any surplus volumes would instead cushion the market against tighter availability of other base oils supplies.