Americas/EMEA base oils demand outlook: Week of 6 October

·         US base oils demand likely to stay muted.

·         Buyers could cover more of any seasonal pick-up in demand at start of Q4 with unused stocks.

·         Lack of weather-related supply disruptions in recent months likely leaves those stocks at higher-than-expected levels.

·         Major refiner’s posted-price cut at end-Sept 2025 adds to buyers’ incentive to hold back until there is clarity over other refiners’ response to the price-adjustment.

·         Impact of cautious demand could be more muted at start of Q4 2025 as domestic plant-maintenance work cuts supply.

·         Cautious demand later in Q4 2025 could have larger market impact if supply recovers strongly following completion of maintenance work.

·         Unusually strong domestic demand in July 2025 accounts for more than 50% of US supply that month.

·         Share of supply is second-highest in twenty-nine months and up from typical share of less than 38% of supply over past year.

·         Strong domestic demand counters impact of surge in output in July 2025.

·         Weaker demand at year-end could instead magnify impact of any rise in output.

·         Dynamic increases importance of overseas demand holding firm over coming months.

·         Overseas demand could instead soften.

·         Buyers in overseas markets are likely to face pick-up in availability from other markets like Europe and Asia.

·         Dynamic would increase importance of US export prices holding at competitive levels to sustain firm demand.

·         US base oils export prices instead extend recent rise relative to prices in markets like India.

·         Moves to line up additional US shipments to India could face further difficulty if buyers target supplies from logistically-closer sources to curb exposure to any downward price-pressure.

·         Recent Group III base oils price-strength relative to Group II prices and to vacuum gasoil follows tighter availability of supplies from Middle East.

·         Supply from Middle East could get boost from pick-up in arrival of shipments in recent weeks and in coming weeks.

·         Improving supply would require commensurate pick-up in demand to sustain balanced-to-tight supply-demand fundamentals.

·         Latin America’s base oils demand could be more muted.

·         Expectations of rise in overseas supply in coming months and downward pressure on prices incentivize buyers to hold back.

·         Signs of steady-to-weak lube demand in the region curb further any urgency for buyers to replenish stocks.

·         Brazil’s lube demand stays steady-to-weak in Aug 2025, reflecting that dynamic.

·         Europe’s base oils demand likely to stay cautious.

·         Blenders’ low stocks could sustain more regular procurement of smaller volumes.

·         Blenders’ low stocks could curb size of seasonal inventory-drawdown at year-end.

·         Signs of steady-to-weak finished lube demand and healthy availability of base oils supply sustain feasibility and attraction of maintaining low stocks.

·         Demand for Group I base oils could be weaker than other grades amid concern about exposure to further downward price-pressure.

·         Overseas demand for Group I base oils could also ease as competing supplies from US and Asia pressure prices in markets like Middle East.

·         FOB Europe Group I SN 500 price-discount to ex-tank Sharjah price narrows at end-Sept 2025 for first time in two months.

·         Any extension of that price-trend, and the underlying fundamentals driving it, would further complicate any arbitrage shipments to outlets like the Middle East.

·         Demand for Group II base oils could be more muted amid high prices relative to other grades and other regions.

·         Steep Europe Group II price-premium to FOB Asia prices could facilitate extension of recent pick-up in arbitrage flows from that region.

·         Any subsequent rise in supply would coincide with seasonal slowdown in demand during final weeks of 2025.

·         Europe’s Group III base oils demand could get support from blenders’ moves to replenish lower stocks.

·         Prospect of pick-up in supplies originating from Middle East in coming weeks could curb urgency to replenish those stocks.