Lower Group I output cuts stocks at a time of year when they typically used to rise
Slump underscores reliance on Italy's one remaining base oils unit
Supply shortfall tightens European Group I availability, pointing to more balanced-than-usual fundamentals in early 2026
Italy’s base oils output fell to a seven-month low in November, squeezing domestic supply and slashing inventories at a time of year when stocks have typically tended to rise.
Total Group I base oils output dropped to less than 10,500 tonnes in November, down from 13,900 tonnes in October, MET data showed.
The November volume was the lowest since base oils plant-maintenance work ended in April, while October was the second-lowest month since then.
The slump in output during the fourth quarter outweighed a seasonal slowdown in demand and added to tighter-than-expected Group I base oils availability across Europe.
Key Highlights
· Output fell because of refinery-maintenance work for the second time in 2025, leaving Italy’s base oils production levels at more typical levels in just four of the first eleven months of the year.
· The November decline underscored Italy’s dependence on one remaining Group I base oils unit, following the 2024 shutdown of its other base oils plant, magnifying the impact of any change in operating rates.
· Italy’s base oils stocks fell to a seven-month low in November, at a time of year when rising year-end inventories previously triggered a wave of surplus spot export cargoes.
· Lower output in November left domestic base oils accounting for less than 15% of Italy’s lube consumption, the lowest share in more than four years and down from more typical levels closer to 40% of demand.
· The shortfall forced blenders to secure replacement Group I supplies from outside Italy or to switch to premium-grade base oils.
Market Repercussions
Italy’s tightening domestic Group I supply coincided with a similar contraction in Türkiye, where supply slumped to a five-year low in October, as well as unexpected production issues in Hungary.
The disruptions compounded an already-tightening European market, where Group I supply dropped in October to the lowest level in almost two years.
The tighter supply eased pressure on refiners to clear surplus volumes in overseas markets and raised the prospect of fundamentals balancing out earlier than usual in early 2026, before tightening further a few weeks later.