India’s August Base Oils Output Rises, Supply Stays Tight

India’s base oils output rose to a four-month high in August as new capacity lifted supply, but stronger domestic demand and export flows absorbed much of the increase just as more Asian barrels moved into tighter overseas markets.

Indian base oils output rose to 140,000 tonnes in August from 120,000 tonnes in July, Ministry of Petroleum and Natural Gas data showed.

The increase marked a ninth consecutive month of year-on-year growth, reflecting new production capacity that started up late last year. More capacity is due to come on stream in the final months of 2026.

The additional supply has yet to materially reduce India’s dependence on imports.

A surge in exports since the second quarter more than offset the rise in output. A pick-up in lubricants demand in the third quarter added to the pressure on supply, leaving the country with a persistent supply shortfall while Asian shipments continue to be drawn into more distant overseas markets.

The shortfall could become more difficult to cover as demand gets a seasonal boost after the monsoon.

Key Highlights

• The gap between output and demand narrowed to 276,000 tonnes in August from 294,000 tonnes in July, still the second-largest in five months.

• India's total base oils supply shortfall showed signs of extending into August, after it widened to close to 100,000 tonnes in July, a third straight monthly deficit and the widest since August 2025.

• Asia's base oils exports to India rose to more than 110,000 tonnes in August, a four-month high, but stayed well below the monthly average of more than146,000 tonnes shipped in the year to April.

• CFR India cargo prices improved sharply in the third quarter, making shipments into India more attractive relative to other destinations.

Market Repercussions

India’s new capacity should gradually reduce its import requirement as production increases, but the balance in recent months shows that the effect has yet to emerge, leaving blenders with lean inventories.

That leaves India competing for more imported barrels just as South Korea, Singapore and Taiwan keep directing cargoes to Europe and the Americas instead.

The need for additional supplies could rise in the fourth quarter as Indian demand enters a stronger seasonal period. Competition for imported barrels could also intensify as planned maintenance in Taiwan and Saudi Arabia removes additional regional supply.