Exports stayed unusually low for a seventh straight month in January, when markets were still focused on expectations of growing surplus supply
Shipments to Mexico, Africa and India fell to 26% of total exports, the lowest share since mid-2022
March's shift in supply expectations has since boosted demand for and the feasibility of arbitrage shipments from the US to Europe and Asia
US base oils and lubricants exports stayed unusually low for a seventh straight month in January, when expectations of rising surplus global supply had yet to give way to growing concern about tighter availability.
Total base oils and lubricants exports held at close to 3.0 million barrels (428,000 tonnes) in January, close to December levels and down 19% year on year, Census Bureau data showed.
The dip in exports for an eighth month reflected regulatory changes that curbed demand in markets such as Mexico, alongside rising supply in Asia and the prospect of additional production capacity coming online over the coming year.
That backdrop has since shifted. A market braced for surplus at the start of the year instead faced growing concern about tighter availability in March amid growing Middle East disruption to base oils and feedstock shipments.
Key Highlights
· Base oils and lubricants exports to Mexico held at their third-lowest level in 37 months, with the lowest and second-lowest levels recorded in November and December.
· Exports to Africa fell to an 18-month low as shipments to Nigeria paused and volumes to South Africa slumped.
· Exports to India stayed unusually low for a second month, at a time of year when they often rebound.
· Combined shipments to Mexico, Africa and India accounted for 26% of total US exports, down from 46% in 2025 and the lowest share since mid-2022.
Market Repercussions
Demand for US base oils slowed in markets like India in recent months as buyers covered more of their requirements with shipments from domestic and regional suppliers.
Expectations of rising surplus supply and subsequent pressure on prices early this year added to the incentive for overseas buyers to hold back.
Those trends compounded the impact of this month’s shift in supply-demand fundamentals.
Concern about lower base oils run rates in Asia, alongside a pause in Group III shipments from the Middle East, coincided with the start of a seasonal rise in demand in northern hemisphere markets.
The combination of tighter supply and rising demand pointed to a pick-up in requirements for US Group II base oils to offset any drop in Asia supply and as an alternative to Group III base oils where possible.
The outperformance of Europe and Asia's Group II prices versus US levels in March reflected that shift, boosting the feasibility of arbitrage shipments, with that price gap likely to widen further.