Global base oils exports to the Middle East fell in August amid a slowdown in flows from Asia.The slowdown followed a surge in shipments from Asia to the region during the previous three months.Asia accounted for more than 60% of global exports to the Middle East so far this year.Total exports from Asia to the UAE and Saudi Arabia combined fell to around 18,000 tonnes in August, from more than 42,000 tonnes the previous month, government data showed..The large July volume helped to boost total shipments to the Middle East to more than 56,000 tonnes that month.The total volume included supplies from Europe and the US.The rise in exports in July helped to cut the volume of surplus supplies in the Asia-Pacific market at the start of the third quarter of the year.The rise in total shipments also boosted blenders’ stocks in the Middle East ahead of a slowdown in demand during the summer months..High inventories and slower consumption then prompted buyers to focus on working down those stocks before seeking additional volumes.The slowdown in demand raised the prospect of complicating the removal of additional surplus supplies from the Asia-Pacific market, as well as Europe and the US, in the month of August.For Asia, a drop in total exports from key suppliers like South Korea and Taiwan, firmer demand from India and a rise in flows to Europe cushioned the impact of lower demand in the Middle East.For Europe, tighter Group I supply in the Middle East boosted the feasibility of moving arbitrage shipments to the region.The arbitrage opportunities highlighted the dip in demand in the Middle East impacted Group II supplies more than Group I.The arbitrage opportunities reflected the surge in Middle East Group I prices relative to other regions and relative to Group II base oils during the third quarter of the year.Prices rose because a drop in Group I supplies from Iran.The higher prices highlighted the region’s reliance on Iran for a large portion of its Group I supplies.The higher Group I prices and that reliance on Iran could trigger a stronger revival in demand for Group II base oils when blenders begin to seek replenishment volumes..S Korea’s August base oils exports fall.Taiwan’s August base oils exports slip.Global base oils arb outlook: Week of 15 September.Base Oil News stories and analysis also available on ICIS platform
