Global base oils exports to the Middle East fell to a five-month low in May as buyers worked through plentiful supplies, curbing demand.The slowdown in shipments showed signs of extending at least through the month of June.Total base oils exports to the UAE and Saudi Arabia combined fell to around 33,000 tonnes in May, government data showed.The volume fell from more than 43,000 tonnes in April to the lowest this year.The supplies originated from US, Europe and Asia, with shipments falling from all those markets.Demand in the Middle East stayed weaker as buyers first consumed the wave of shipments that moved to the region in the first quarter of the year.Weaker demand left regional base oil prices lagging the rise in prices in those source markets during the second quarter of the year.The higher prices in US and Europe especially partly reflected tighter surplus supply.The tighter supply curbed the need to keep open the arbitrage to outlets such as the Middle East.Supply from Asia slowed as more shipments moved instead to India in April and May.Supply from Asia extended its slowdown in June even as a drop in demand in India compounded a slowdown in buying interest in China and the Middle East.A sharp fall in South Korea’s base oils exports in June, including a slump in shipments to the Middle East, pointed to lower production levels in response to the drop in demand.The slowdown showed signs of extending into July, with little sign of any significant pick-up in shipments from South Korea to the Middle East so far this month.Any subsequent moves by Middle East buyers to replenish stocks would entail a time lag of several months between procurement, loading and delivery of supplies from those markets.An alternative would be to secure more shipments from Saudi Arabia. The move would likely shorten that time lag.There were signs of a strong pick-up in exports from Saudi Arabia to the UAE in May, with the trend extending into June..S Korea’s June base oil exports to UAE, India fall.US’ May base oils/lube exports fall
