Europe’s Group III base oils supply stayed lower than usual for a second month in November, limiting surplus availability and offsetting the typical year-end slowdown in demand.

Total Group III supply of close to 135,000 tonnes in November edged up from around 130,000 tonnes in October, government and shipping data showed.

The volumes remained well below typical levels of more than 145,000 tonnes/month in the six months to September.

Lower supply and a smaller year-end surplus raised the prospect of a quicker recovery in demand in early 2026 as blenders move to replenish depleted stocks.

Key Highlights

·         Premium-grade supplies from Spain stayed lower than usual in November for a second month, with the trend showing signs of extending into early 2026.

·         Middle East supply rebounded as imports from Bahrain and the UAE rose to a one-year high, offsetting a dip in shipments from Asia to a five-month low.

·         Shipments from Bahrain and the UAE showed signs of easing in December and January, coinciding with a slowdown in cargo arrivals from Indonesia at end-2025.

·         The slowdown in flows from Bahrain and UAE would contrast with a wave of shipments from those markets reaching the US in December, alongside rising volumes moving to India.

Market Repercussions

Europe’s Group III bases supply tightened in the final months of 2025 even as premium-grade prices extended their rise relative to the US and Asia.

Group III prices also strengthened against other base oils grades in the region, underlining the product’s tighter fundamentals.

The tighter supply cushioned the impact of lower year-end demand, easing pressure on regional distributors to discount or clear surplus volumes.

A recovery in demand in the coming weeks could by contrast compound the impact of supply fundamentals that remained balanced-to-tight at the start of this year.