Global base oils arb outlook: Week of 15 September

·         UAE’s imported Group I SN 500 price extends rise relative to prices in Europe and Asia in H1 Sept 2025.

·         UAE SN 500 price-strength reflects tight availability of Group I heavy neutrals in Middle East market.

·         Tight availability contrasts with improving or surplus availability of Group I heavy neutrals in Asia and Europe.

·         Dynamic increases importance of and competition for outlets like UAE and India.

·         FOB Europe Group I SN 500 price falls relative to FOB Asia SN 500 price since H1-Aug 2025 to narrowest since April 2024.

·         Narrowing price-premium increases competitiveness of moving supplies from Europe to markets like UAE and India.

·         FOB Europe Group I SN 500 price-discount to ex-tank Singapore price also softens, to widest level since Q1 2024.

·         Widening price-discount increases feasibility of moving supplies from Europe to southeast Asia.

·         UAE’s imported Group I SN 500 price also strengthens relative to imported Group II N500 price to firmest level in two years.

·         UAE SN 500 price-strength relative to Group II further highlights tight availability of Group I heavy neutrals.

·         Tight availability contrasts with increasingly plentiful availability of Group II heavy neutrals in Asia and US.

·         Price-strength of Group I SN 500 vs Group II N500 shows similar trend in other key outlets like India and in source-markets like Asia and US.

·         Dynamic increases attraction for blenders in UAE and India to procure more Group II heavy grades in view of its competitive price and more stable supply.

·         Start-up of new Group II production capacity in Singapore in H2 2025 set to further increase regional availability of Group II heavy grades.

·         Rising availability and competitive prices of Group II heavy grades in Asia and US raise prospect of further eroding already-shrinking market for Group I SN 500.

·         Rising availability and competitive prices of Group II heavy grades coincide with increasingly competitive prices of Group I SN 500 in Europe.

·         Rising competition of Group II base oils, shrinking market for Group I heavy neutrals and rising competition from Europe point to growing challenge for Asia’s supplies of Group I SN 500.