· UAE’s imported base oils cargo prices hold steadier since start of the year vs Europe Group I and US Group II export prices..· Steadier price differentials follow strengthening of CFR UAE prices vs Europe and US export prices through most of H2 2024..· UAE price differentials vs Europe and US base oils prices stabilize early this year at narrower levels than in Q1 2024..· Narrower price differentials contrast with CFR UAE’s price premium to Europe and especially US prices in Q1 2024..· Wider price premium facilitated arbitrage shipments, coincided with surge in exports to Middle East in Q1 2024..· CFR UAE price discount to Europe export prices and smaller premium to US export prices in Q1 2025 complicates similar flow of arbitrage shipments this year.· Less feasible arbitrage partly reflects steadier Europe and US export prices amid more limited pressure from surplus supply.· More limited surplus supply curbs pressure on sellers to trim prices.· More limited surplus supply puts onus on buyers to raise bids if they need additional volumes.· Less feasible arbitrage from Europe and US coincides with slump in Asia’s base oils exports to Middle East at end-2024 and early this year..· Asia’s base oils exports could remain lower than usual until completion both of plant maintenance work and of seasonal rise in demand in Asia over coming weeks..· Less feasible arbitrage from Europe and US, even with slump in Asia shipments to Middle East, suggests that supply in the Middle East region is sufficient to meet demand.· Supply from Saudi Arabia shows signs of staying lower than usual in recent weeks after dip in country’s exports in Jan 2025..· Supply from Iran faces slowdown during month of Ramadan and ahead of and during Iranian New Year holidays in H2 March 2025.· Even if supply in UAE is sufficient to meet demand, inventory levels are likely to trend lower, especially compared with H1 2024.· Lower inventory levels would support firmer buying interest over following months.· A recovery in surplus supply in Q2 2025 would enable buyers to replenish depleted stocks.· Lack of any such recovery in supply would complicate buyers’ ability to replenish depleted stocks.· Dynamic reflects impact of tighter surplus supply in US, Europe and Asia early this year vs Q1 2024.· Markets that are typically regular outlets for surplus volumes, such as UAE, face larger repercussions of the tighter supply..Global base oils margins outlook: Week of 3 March.Asia base oils demand outlook: Week of 3 March.Asia base oils supply outlook: Week of 3 March
· UAE’s imported base oils cargo prices hold steadier since start of the year vs Europe Group I and US Group II export prices..· Steadier price differentials follow strengthening of CFR UAE prices vs Europe and US export prices through most of H2 2024..· UAE price differentials vs Europe and US base oils prices stabilize early this year at narrower levels than in Q1 2024..· Narrower price differentials contrast with CFR UAE’s price premium to Europe and especially US prices in Q1 2024..· Wider price premium facilitated arbitrage shipments, coincided with surge in exports to Middle East in Q1 2024..· CFR UAE price discount to Europe export prices and smaller premium to US export prices in Q1 2025 complicates similar flow of arbitrage shipments this year.· Less feasible arbitrage partly reflects steadier Europe and US export prices amid more limited pressure from surplus supply.· More limited surplus supply curbs pressure on sellers to trim prices.· More limited surplus supply puts onus on buyers to raise bids if they need additional volumes.· Less feasible arbitrage from Europe and US coincides with slump in Asia’s base oils exports to Middle East at end-2024 and early this year..· Asia’s base oils exports could remain lower than usual until completion both of plant maintenance work and of seasonal rise in demand in Asia over coming weeks..· Less feasible arbitrage from Europe and US, even with slump in Asia shipments to Middle East, suggests that supply in the Middle East region is sufficient to meet demand.· Supply from Saudi Arabia shows signs of staying lower than usual in recent weeks after dip in country’s exports in Jan 2025..· Supply from Iran faces slowdown during month of Ramadan and ahead of and during Iranian New Year holidays in H2 March 2025.· Even if supply in UAE is sufficient to meet demand, inventory levels are likely to trend lower, especially compared with H1 2024.· Lower inventory levels would support firmer buying interest over following months.· A recovery in surplus supply in Q2 2025 would enable buyers to replenish depleted stocks.· Lack of any such recovery in supply would complicate buyers’ ability to replenish depleted stocks.· Dynamic reflects impact of tighter surplus supply in US, Europe and Asia early this year vs Q1 2024.· Markets that are typically regular outlets for surplus volumes, such as UAE, face larger repercussions of the tighter supply..Global base oils margins outlook: Week of 3 March.Asia base oils demand outlook: Week of 3 March.Asia base oils supply outlook: Week of 3 March
