Global base oils margins outlook: Week of 30 June

·         Global base oils prices recover versus feedstock/competing fuel prices after crude prices fall.

·         Firmer base oils price-differentials curb pressure on refiners to adjust output in response to squeezed margins.

·         Firmer margins, and easing pressure to adjust output, coincide with prospect of easing supply-demand fundamentals in coming weeks.

·         Firm margins, steady output and weaker fundamentals could trigger faster pick-up in surplus supply.

·         FOB Asia Group I/II base oils price-premium to Singapore gasoil partially recovers.

·         FOB Asia Group II price-premium remains well below recent highs in April-May 2025.

·         Lower price-premium coincides with signs of improving supply fundamentals.

·         Group II heavy-grade premium remains high even if well below those recent highs.

·         Higher Group II light-grade premium to Singapore gasoil curbs pressure on refiners to make immediate adjustments to output, especially if premium extends recovery.

·         Group II light-grade price-premium is still relatively low even after recovery at end-June 2025. 

·         China’s Group II N500 price premium to Shandong diesel price rebounds to highest in more than a month.

·         China’s Group II N150 premium to diesel stays close to lowest in more than three months.

·         Diverging price premiums follow sustained outperformance of Group II N150 versus N500 over last four months.

·         Lower N150 premium could incentivize refiners to boost diesel output.

·         CFR India Group II N70 price-premium to Singapore gasoil recovers after sharp slide.

·         Higher price-premium curbs pressure on refiners to target higher outright prices at a time of year when demand usually sees seasonal slowdown.

·         Higher price-premium makes arbitrage more feasible, boosts incentive for refiners to maintain steady output of very-light grade base oils.

·         Europe’s Group II heavy-grade price-premium to vacuum gasoil (VGO) rises to highest since Q1 2023.

·         Rising N500 price-premium outpaces N150 premium that remains firm but below recent high in May 2025.

·         Strength of Group II heavy-grade price premium incentivizes refiners to maximise output of the grade, points to increasingly firm fundamentals for the grade.

·         US Group II export price-premium to VGO recovers, with light-grade premium rising close to highest since Oct 2024, and similar to year-earlier levels.

·         Excluding slump in price margins in mid-June 2025 after surge in crude prices, Group II export price-premium holds in narrow range throughout most of Q2 2025.

·         Narrow range contrasts with surge in Group II export price-premium to VGO in Q2 2024, with premium extending gains through Q3 2024.

·         Export price-premium to VGO would need to break out of narrow range to repeat that trend this year.

·         Any such break-out would likely need increasingly firm supply-demand fundamentals to support such a scenario.

·         Supply-demand fundamentals are instead more likely to face downward pressure in coming months, notwithstanding any unexpected supply disruptions.