Global base oils supply remained close to long-term average levels despite lower Middle East production and Europe's sharp output decline
Asia strengthened its role as the world's largest supply region as China maintained near-record output
Firm overall supply masked growing divergence between well-supplied Group I and Group II markets and tightening Group III availability
Global base oils supply remained firm in April despite lower production in the Middle East and Europe, as strong Asian output continued to offset disruption elsewhere.
Global production reached more than 2.85 million tonnes in April, EIA, MET, Ministry of Energy, ANP, METI, KPA and other government data showed.
The volume was down from March's more-than five-year high but still up 9% year on year and close to average monthly levels during the previous year.
The total volume pointed to adequate supply. The composition and origin of the supplies told a different story.
Global base oils markets saw surging prices and a wave of buying in March and April to cover for supply disruptions in the Middle East.
But April still got support from Middle East deliveries that set off before the disruptions began.
Supply instead fell mainly because of lower output in Europe, while China also eased from March's elevated level.
Even so, Chinese production remained near multi-year highs, helping Asia maintain output above 1.50 million tonnes for the fourth time in five months. Before December, it last exceeded that level in January 2021.
April's data pointed to a market that remained structurally well supplied despite the disruption.
The growing imbalance was increasingly one of product mix rather than total availability, with Group III tightening while broader base oils supply remained resilient.
Key Highlights
· Global supply rose for a sixth straight month from a year earlier despite easing from March's five-year high.
· Asia accounted for more than 55% of global production, its highest monthly share in more than five years.
· Europe's production fell to a six-month low, accounting for a larger share of the monthly decline than the Middle East.
· Americas production remained broadly unchanged around its longer-term average.
Market Repercussions
April's total supply concealed two diverging themes: Asia producing at its highest sustained levels in years, and the Middle East's pre-disruption Group III shipments making their final arrivals.
Rising Chinese production and sustained regional output increasingly positioned Asia as the market's primary source of incremental supply, while Europe's greater reliance on imported premium grades left it more exposed to disruptions in Group III availability.
Middle East shipments were set to decline further after April, leaving the global market structurally short of Group III and turning to newer sources such as China and India to fill some of the gap.
The disruption accelerated the shift in global supply toward Asia, as the region's expanding output of premium grades reduced global reliance on Middle East volumes.