Global base oils supply rose to its highest level in more than five years in March, helping absorb a surge in demand as seasonal consumption coincided with stock-building across all major markets.

Total global supply rose to more than 3.10 million tonnes in March, up from less than 2.80 million tonnes in February, according to EIA, BAFA, MET, Ministry of Energy, ANP, METI, KPA and other government data.

The volume was the highest since January 2021 and rose year on year for a fifth straight month.

The elevated supply had previously raised concerns that global markets would face oversupply during 2026.

Stronger production instead proved timely as buyers accelerated purchases in March to cover seasonal requirements, supply-disruption risks and concerns about further price increases.

Key Highlights

·         Asia's supply, excluding China, rose year on year for an eighth straight month, climbing to a multi-year high.

·         Supply exceeded 1 million tonnes for the third time in four months, after previously reaching that level only three times during the prior 43 months.

·         China’s output rose to the highest in more than five years.

·         Europe's supply rose to a seven-month high, supported by higher output from major producers including Netherlands, the UK and Spain.

·         Americas supply rose to a three-month high on a recovery in US output.

Market Repercussions

Global base oils prices surged from March, as the combination of spiking demand and higher crude oil and diesel prices more than offset the rise in base oils supply.

But the rise in supply limited the extent of any tightening. Higher output in Asia, Europe and the Americas helped absorb a significant share of the demand surge, preventing a much larger draw on inventories.

The March market balance suggested that stock-building and forward procurement played a significant role in tightening availability alongside actual supply disruptions.