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· US base oils exports to Europe and South America rose to their highest combined level in 29 months, with Europe reaching a 22-month high and South America its highest in more than a decade
· The surge coincided with higher prices and disruption-related demand, helping Europe maintain firm Group II availability despite tighter global trade flows
· Rising exports reinforced signs that Group II supply remained more resilient than expected, despite strong domestic demand and pressure on refiners to prioritise fuels output
US base oils and lubricants exports to Europe and South America surged in April, reinforcing signs that Group II supply remained more available than expected despite disruptions, strong domestic demand and pressure on refiners to prioritise fuels production.
Combined exports to Europe and South America rose to 1.86 million barrels in April (261,000 tonnes), from close to one million barrels in March, Census Bureau data showed. The volume was the highest in 29 months.
The increase came at a time when buyers in multiple regions were accelerating purchases to cover against supply disruptions and higher prices. The surge in shipments pointed to sufficient US supplies to cover both domestic and overseas requirements, especially for term buyers.
Similar patterns in Europe and Asia pointed to precautionary buying rising faster than supply tightening.
Key Highlights
· Base oils exports to Europe rose to more than 685,000 barrels, the highest since June 2024 and almost double March volumes.
· Shipments to South America climbed to 752,000 barrels, the highest in more than a decade, supported by unusually strong flows to Colombia and firm volumes to Brazil and Argentina.
· Europe and South America accounted for 54% of total US exports, up from 36% in March and one of the highest shares since mid-2022.
Market Repercussions
The recovery in shipments to Europe followed a period when disruption-related buying and higher prices boosted the attraction of moving more shipments to the region.
US shipments showed signs of holding firm in May and June, sustaining Europe’s Group II supply at comfortable levels throughout the second quarter.
Rising flows to Europe and South America contrasted with a slump in shipments to India, Africa and Mexico, pointing to a split between term and spot markets that faced tighter supply.
Even so, firm US Group II availability added to a similar trend in Asia, pointing to sufficient supply even before any sustained recovery in Hormuz flows.
Steady availability suggested that the key impact of the Middle East disruptions was a sharp surge in precautionary buying that temporarily outpaced underlying supply that remained largely intact.
