India’s imports of light and very-light grade base oils stayed low in February even before March’s surge in diesel prices incentivized refiners to prioritize motor fuel production.

Total imports of Group II light grades fell to less than 45,000 tonnes in February, down 15% year on year and for a fourth straight month, provisional customs data showed.

The fall in imports since November coincided with tighter overseas availability of light-grade supplies as refiners had prioritised heavy-grade output, whose premium to light neutrals surged in the year to mid-2025.

While that heavy-grade premium narrowed sharply in the second half of last year, firm diesel prices sustained the incentive to limit light-grade base oils production.

The surge in diesel prices in March made that incentive starker.

Key Highlights

·         February light-grade imports were well below the monthly average of around 51,000 tonnes in the year to October.

·         Very-light-grade base oils imports recovered to more than 100,000 tonnes in February but remained the second lowest in a year, with January the lowest over that period.

·         Very-light-grade imports from the Middle East averaged less than 13,000 tonnes/month in January and February, down from more than 23,000 tonnes/month in 2025.

·         South Korea accounted for more than 67% of India’s 2cst and 3cst imports in February and over the past year, highlighting its role as the main supplier.

Market Repercussions

Surging diesel prices in March boosted their premium to crude oil to a multi-year high, leaving base oils prices under pressure.

Stronger margins and concern over motor fuel supply incentivized refiners to redirect very-light grade base oils back into the diesel pool.

Any such moves by South Korean refiners would cut supply from India’s largest source of light and very-light grade base oils.

The slowdown would compound the impact of the drop in flows from the Middle East that began even before the disruption to shipments through the Strait of Hormuz.