Group III base oils supply stayed below typical levels in January, increasing exposure to a subsequent slump in Middle East shipments
The Middle East accounted for more than 30% of Europe's supply in January and over 40% in late-2025, making the expected shortfall difficult to offset
The supply-drop is expected to coincide with a seasonal rise in demand, boosting pressure to shift to alternative premium-grade base oils
Europe’s Group III base oils supply stayed low in January, leaving the market more exposed to the subsequent slump in Middle East shipments.
Total Group III supply exceeded 120,000 tonnes in January, recovering from a 23-month low in December but down 6% year on year, marking the third such monthly fall, according to Eurostat, port data and other government data.
The lower supply kept the market better balanced, supporting firm prices and reducing the impact of seasonally weak demand and cautious stock-building by blenders.
The lack of additional surplus volumes was likely to magnify the impact of the upcoming supply squeeze after the pause in Group III shipments from the Middle East since late February.
Key Highlights
· Total supply lagged the 2025 monthly average of more than 135,000 tonnes but would likely have been sufficient without the disruption to Middle East flows.
· Shipments from the Middle East accounted for 33% of Europe’s Group III supply in January, down from more than 40% in November and December.
· The Middle East accounted for 37% of Europe’s Group III supply in 2025, rising from 36% in 2024 to the highest in at least six years.
· Group III shipments from Europe accounted for less than 45% of total supply in January, extending a similar trend through 2025.
Market Repercussions
Europe’s Group III base oils supply showed signs of holding firm in February and March, boosted by steady flows from Asia and the continued arrival of Middle East cargoes.
Supply was then likely to fall in April as the pause in Middle East shipments began to feed through.
The disruption coincided with a seasonal rise in demand that could have begun earlier than usual as supply concerns prompted blenders to bring forward their procurement plans.
The loss of some 50,000 tonnes/month of Group III supplies from the Middle East was too large to offset with higher volumes from other sources.
The shortfall was instead likely to shift demand towards alternative premium-grade base oils as a partial substitute.