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Output rose to a six-month high, recovering from maintenance-hit lows and lifting Group I supply ahead of seasonal demand
Stocks recovered to a five-month high but remained well below year-earlier levels, leaving a thinner buffer ahead of late-February disruptions
Tighter Group I and Group III availability raised the prospect of stronger Group II demand across Europe and from the US
Italy’s base oils output extended its recovery in February, boosting regional Group I supply ahead of a seasonal rise in demand, scheduled plant maintenance and unexpected supply disruptions from the end of the month.
Total output rose to close to 50,000 tonnes in February, up from less than 48,000 tonnes in January to a six-month high, Ministry of Environment and Energy Security data showed.
Output recovered from less than 15,000 tonnes/month in October and November when plant maintenance work cut production and added to a squeeze on Europe’s Group I supply at the end of last year.
A rebound in Italy’s base oils exports to markets outside Europe from the start of the year limited the recovery in regional inventories ahead of the expected seasonal rise in demand from the end of the first quarter, leaving stocks thinner than usual.
Key Highlights
· Italy’s base oils stocks recovered to a five-month high of more than 40,000 tonnes, but the volume was down from close to 65,000 tonnes a year earlier.
· Base oils exports edged down from January but held well above typical levels in 2025.
· Europe’s January Group I base oils supply fell year on year for the fourth time in five months even with the recovery in Italy’s output.
· Italy’s gasoil yield reached 41% of total refining output in January-February, up from 39% in the fourth quarter of 2025 but below peak levels above 45% in the past three years.
Market Repercussions
Balanced-to-tight Group I base oils supply across regional markets during the winter months reduced pressure on refiners to place surplus volumes into export markets such as West Africa and India.
A seasonal pick-up in regional demand, combined with scheduled plant maintenance work, already raised the prospect of tightening Group I fundamentals in the final weeks of the first quarter, before the late-February disruptions emerged.
The thinner supply buffer increased Europe’s exposure to those disruptions and to any moves by regional refiners to raise gasoil output towards maximum levels.
Tighter Group I supply, alongside the loss of replenishment Group III flows from the Middle East, raised the prospect of stronger Group II demand both within Europe and from the US.
