Europe’s October Base Oils Supply Surplus Shrinks to 18-Month Low

Europe’s base oils supply surplus narrowed in October to its lowest level in eighteen months as regional output slumped to the lowest since early-2024.

Demand also fell in October, but at a slower pace.

The surplus of supply over demand dropped to less than 15,000 tonnes, after already falling to a five-month low in September, government data showed.

The contraction reversed a surge in Europe’s supply-surplus in August to a multi-year high of more than 220,000 tonnes.

More balanced supply-demand fundamentals in September and October eased pressure on refiners heading into the final weeks of 2025.

Key Highlights

·         Europe’s base oils output fell to less than 320,000 tonnes in October, down from over 380,000 tonnes in September and the lowest since February 2024.

·         Base oils imports fell year-on-year for the third time in four months, slipping to a three-month low.

·         Lower supply impacted Group I and Group III base oils the most, with prices firming relative to Group II in the fourth quarter.

·         Total demand fell year-on-year for the eighth time in nine months, driven by an ongoing slowdown in exports.

·         Lower exports more than offset steadier regional lube consumption in the three months to October.

Market Repercussions

The more balanced supply-demand fundamentals in October left the region’s refiners better positioned to manage a seasonal slowdown in consumption at year-end.

It also raised the prospect of a smaller surplus carried into the start of 2026, when blenders are likely to seek replenishment volumes to rebuild lower stocks.

The smaller surplus could also temper concerns about price-corrections, adding to a pick-up in demand.

The tighter supply in October mostly reflected the sharp dip in base oils output rather than any marked change in imports or lube consumption.

The dynamic means any recovery in base oils output could trigger a rapid rise in surplus supply.