Argentina’s base oils supply fell to a three-month low in October, with both domestic output and imports sliding at a time when demand climbed to a four-month high.

The mismatch between tightening supply and firmer consumption trimmed the country’s supply surplus, which had ballooned in September when supply hit a three-year high and demand weakened.

Total base oils supply dropped to 17,000 cubic meters (15,000 tonnes) in October, down from 28,000 cubic meters in September, Ministry of Economy data showed.

September’s surge in surplus supply subsequently began to shrink in October.

The surplus is likely to decline further in the coming months following unexpected production issues in November at the country’s largest Group I base oils unit.

Argentina had relied more heavily on domestic production throughout most of this year, with output covering a larger-than-usual share of supply and cutting the country’s import requirements.

Even with October’s slowdown, output still accounted for more than 66% of total supply in the first ten months of the year.

The prospect of lower output and higher demand could reverse that dynamic over the coming months and trigger a sharper pick-up in import requirements.  

The US market would be the key beneficiary of such a development.

The US remained Argentina’s largest external source of base oils even as its share of the country’s total supply dipped to less than 20% during the first half of the year.

The share was down from 27% in 2024 and close to 40% in 2023.