South Korea's base oils exports to the US rose to a three-year high in May, reversing April's unusually weak shipments
Higher shipments narrowed only part of the widening Group III shortfall, leaving the US increasingly dependent on South Korean volumes remaining elevated
South Korea's role as the primary alternative Group III supplier increased competition for its volumes across the US, Europe and Asia
South Korea's base oils exports to the US surged to a three-year high in May, but the increase highlighted the scale of a Group III supply gap that was widening, not closing.
Exports rose to 85,000 tonnes in May from 16,100 tonnes in April, Korea Customs Service data showed. The April slump to a near-six-year low pointed to timing of cargo loadings rather than a structural drop in supply, with May's rebound restoring the underlying flow.
South Korea has emerged as the principal alternative supplier of Group III base oils to the US following the loss of Middle East shipments.
But the volume remained insufficient to cover the shortfall, leaving buyers competing for a limited pool of supply that also faced competition from blenders in Europe and Asia.
Key Highlights
· Monthly exports to the US averaged around 60,000 tonnes during March-May, up from 43,100 tonnes in 2025.
· The US accounted for 27% of South Korea's total exports in May, up from less than 15% in 2025 and the highest share in more than a decade.
· Middle East shipments to the US fell by more than 40,000 tonnes/month during March-April compared with average 2025 levels.
Market Repercussions
South Korea's additional exports covered only part of the shortfall created by lower shipments from the Middle East. The gap is likely to widen further if Middle East exports remain low in the coming months, even after any reopening of the Strait of Hormuz.
Buyers’ growing reliance on South Korean volumes reversed a trend in recent years where Middle East producers steadily expanded their share of the US Group III market.
South Korea's reliable supply during the disruption increased its share of the US market and could add to buyers’ incentive to reduce their reliance on Middle East volumes even after a resumption of regular flows from the region.