Europe's base oils supply balance recovered to a five-month high in January, driven by stronger imports
Demand remained weak, with falling consumption and the lowest January exports in more than seven years
Limited buffers increased exposure to both regional and global supply disruptions
Europe’s base oils supply balance recovered to a five-month high in January, leaving the market better balanced ahead of a seasonal pick-up in demand and disruptions later in the first quarter.
Total supply, or output and imports combined, came to more than 530,000 tonnes in January, up from less than 500,000 tonnes in December, CBS Statline, Eurostat and other government data showed.
The increase in supply contrasted with steady demand, or regional consumption and exports combined, which held around 450,000 tonnes for a second month.
The rise in surplus volumes helped offset unusually tight supply during the final four months of 2025, leaving fundamentals more balanced at the start of the year rather than creating a meaningful surplus.
Key Highlights
· Total supply remained weak, falling 3% year on year and for a ninth straight month.
· Supply rose from December mostly because of a rebound in imports supported by a simultaneous increase in flows from the US, Middle East and Asia.
· Rising imports from those markets lifted Europe’s premium-grade supply to a five-month high.
· Steady demand contrasted with a typical rebound in January consumption from December in previous years, as exports fell to the lowest January level in more than seven years.
· Regional lubricants consumption extended its fall for a fourth month, further limiting any rebound.
Market Repercussions
The improved balance left the market better prepared for a seasonal pick-up in consumption, but without a meaningful surplus to draw on when disruptions emerged from end-February.
Blenders’ preference for lean stocks amplified the market's vulnerability to both regional supply pressure and any drop in import flows.
Imports made up around 30% of Europe’s supply in the past year, with premium-grade base oils accounting for most of the volume.
Shipments from the Middle East faced direct disruption from end-February, while refinery run cuts and competition from other markets put pressure on flows from the US and Asia.
Regional supply faced similar pressure as refiners focused on securing feedstock and maximising motor fuel output.