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Asia's premium-grade imports from the Middle East almost disappeared in June as Qatar's shipments to Hong Kong halted
South Korea's elevated output helped offset part of the shortfall, but no supplier was large enough to replace the lost Middle East volumes
Tighter Group III supply is likely to intensify competition for the cargoes that remain
Asia's premium-grade base oils imports from the Middle East almost disappeared in June, cutting off one of the region’s biggest sources of Group III supply.
Total imports fell to less than 2,000 tonnes in June from more than 35,000 tonnes in May, according to Enterprise Singapore, Hong Kong's Census and Statistics Department and other government data. The volume slumped from typical monthly levels of close to 75,000 tonnes during 2025.
The collapse left South Korea covering an even greater share of Asia's premium-grade supply. Refiners there maintained unusually high premium-grade production for a second straight month, but the loss of Middle East barrels was too large for any single producer to replace.
FOB Asia Group III prices reflected that tightening. Prices lagged the surge in Europe and the US during April and May, when stronger overseas margins encouraged refiners to redirect cargoes westward. In June, Asia's prices rose faster, narrowing that gap.
Key Highlights
· Qatar's shipments to Hong Kong stopped, following the delivery of almost 34,000 tonnes in May.
· Singapore received less than 100 tonnes from Qatar for a second straight month.
· China’s imports from Bahrain remained below 400 tonnes for a third month, while UAE cargoes to the country remained absent.
· Asia's June data is released well ahead of Europe and the US, whose May imports from the Middle East had already slumped.
Market Repercussions
The June collapse left buyers competing for a much smaller pool of premium-grade cargoes.
South Korea's elevated production and firmer Chinese supply helped offset part of the shortfall, but neither was large enough to replace the lost Middle East volumes.
Even with those supplies, the same limited pool of substitute cargoes now had to cover buyers the Middle East used to supply.
Asia's Group III discount to Europe and US markets narrowed in June, reducing the incentive to keep diverting cargoes westward. But with supply remaining tight and demand still firm, competition for the remaining Group III cargoes is likely to intensify.
