Global base oils margins outlook: Week of 28 July

·         Global base oils prices turn more mixed relative to feedstock/competing fuel prices.

·         Light-grade margins face more pressure in Asia than in other markets.

·         Dynamic boosts incentive for adjustments in output in that market, points to more balanced fundamentals in other markets.

·         Heavy-grade margins remain at more elevated levels, especially in Europe.

·         Dynamic points to firm supply-demand fundamentals, boosting incentive for refiners to boost supply of the grade, especially in Europe.

·         FOB Asia base oils cargo premium to Singapore gasoil holds steadier.

·         Group II heavy-grade premium to gasoil stays much lower than in Q2 2025, closer to levels in H2 2024.

·         Even at lower level, heavy-grade premium stays high and at level that incentivizes refiners to maintain steady output.

·         Group II light-grade premium to gasoil stays much lower than in Q2 2025 and lower than in most of H2 2024.

·         Lower premium could incentivize refiners to adjust output levels.

·         China’s domestic Group II N150 premium to Shandong diesel price stays low.

·         Weak base oils premium curbs incentive for domestic refiners to raise or maintain output levels.

·         Any incentive to maintain or trim output coincides with less feasible arbitrage to move more supplies to China from regional refiners.

·         Weakening price signals for domestic or overseas refiners point to slack demand.

·         CFR India Group II N70 premium to Singapore gasoil holds steadier.

·         Premium holds at level that sustains attraction of moving more supplies to India.

·         Premium remains at much lower level than in Q2 2025, incentivizing refiners to consider alternative options.

·         N70 premium at lower levels than in Q2 2025 contrasts with increasingly high diesel price relative to crude.

·         Diverging price dynamics could incentivize refiners to prioritise diesel market.

·         Europe’s Group II base oils prices hold firm vs vacuum gasoil (VGO), especially for heavy grades.

·         Firm price-premium coincides with ongoing Group II price-strength relative to other grades and other regions.

·         Dynamic points to tight supply-demand fundamentals, incentivizing pick-up in supplies in or to Europe.

·         US Group II light-grade export price-premium to VGO extends fall.

·         Sliding premium contrasts with higher base oil premium in Q2 2025 and surging premium in Q3 2024.

·         Sliding premium contrasts with steadier domestic light-grade premium to VGO.

·         Relative strength/stability of domestic Group II light-grade premium could incentivize refiners to maintain steady output and to clear surplus volumes in overseas markets.