· Europe’s Group II base oils prices hold unusually firm versus vacuum gasoil at start of Q3 2025..· Europe’s Group II base oils price-differentials hold unusually firm vs Group I and Group III base oils at start of Q3 2025..· Europe’s Group II base oils price-premium to Asia/US prices trends higher from early-Q2 2025. .· Europe’s Group II base oils price-strength points to unusually firm supply-demand fundamentals.· Europe’s Group II base oils supply holds in narrow range in four months to start of Q2 2025..· Supply could rise above those levels at end-Q2 2025 after US base oils exports to Europe rise to eight-month high in May 2025..· Supply could get further boost from additional arbitrage shipments from other markets like Middle East and Asia.· Europe’s Group II prices extend rise vs other regions despite rise in supplies from sources like US..· Steady-to-higher Group II base oils supply contrasts with sharp fall in Europe Group I supply at start of Q2 2025..· Group I supply falls because of planned/unexpected plant-maintenance work, and recent drop in production capacity.· Additional plant-maintenance work continues to curb Group I supply through rest of Q2 2025..· Steady-to-higher Group II supply contrasts with lower Group III supply at start of Q2 2025..· Group III supply likely stays lower through rest of Q2 2025 amid drop in shipments from Spain and plant-maintenance in Middle East..· Europe’s steady-to-firm Group II supply contrasts with tighter availability of Group I/Group III base oils..· Europe’s Group II base oils prices hold firm or extend rise vs Group I/III prices in Q2 2025 despite firmer supply vs those other grades.· Europe’s firm Group II base oils prices, despite steady-to-higher base oils supply, suggests that demand is key factor supporting prices.· Europe’s Group II base oils demand could be getting longer-term support from more widespread transition to using premium-grade base oils to meet increasingly stringent lube specifications.· Such a dynamic could sustain firmer, more inelastic demand for Group II base oils, cushioning impact of higher Group II price-differentials.· Europe’s Group II base oils demand could instead be getting short-term support from tighter availability of Group I/III base oils, especially of heavier grades.· Such a dynamic could trigger drop in more elastic demand for Group II base oils as availability of Group I/III base oils recovers in coming months.· Higher Group II price-differentials vs other grades/regions could magnify drop in demand.· Dynamic suggests that key drivers behind recent demand-strength are likely to be major factors determining sustainability of that demand over the coming months.· Europe’s Group II base oils price-performance in coming weeks likely to reveal whether short-term or long-term factors were the key drivers behind recent demand strength..US’ May base oils exports to Europe rise.Netherlands’ April base oils output rises.UK’s April base oils output falls.Global base oils margins outlook: Week of 14 July.Asia base oils demand outlook: Week of 14 July.Asia base oils supply outlook: Week of 14 July
