Global base oils margins outlook: Week of 8 September

·         Global base oils prices mostly fall versus feedstock/competing fuel prices.

·         Price-differentials fall more steeply in Europe and US than in Asia, pointing to weaker supply-demand fundamentals in those markets.

·         Even with lower differentials, global base oils margins hold at levels that incentivize refiners to maintain firm output.

·         Firm output would increase need for pick-up in demand to absorb rising supplies.

·         Firm output and lagging demand would increase prospect of additional rise in surplus supplies.

·         FOB Asia base oils prices fall versus Singapore gasoil prices.

·         Heavy-grade price-differentials remain at elevated levels even if down from Q2 2025.

·         Firm margins incentivize refiners to maintain high output of heavy-grade base oils.

·         High margins for Group I heavy grades coincide with signs of pick-up in spot supply.

·         Demand would need to hold at elevated levels to absorb pick-up in spot supply.

·         Light-grade margins dip even amid signs of firmer fundamentals for those grades.

·         Dynamic could prompt price-adjustment to maintain margins at levels that sustain higher output levels.

·         Domestic China Group II N150 price-premium to Singapore gasoil extends rise to highest since mid-May 2025.

·         Rising N150 price-premium points to firmer supply-demand fundamentals, boosts incentive for refiners to raise output.

·         Price-premium extends rise even with recent jump in China’s Group II output and more feasible arbitrage.

·         Rising price-premium and rising supply points to strong demand or sharp build-up of inventories.

·         CFR India Group II N70 price-premium to Singapore gasoil extends fall to lowest in more than a month.

·         Price-premium stays at elevated level even after correction in recent weeks.

·         Any extension of drop in price-premium could point to weaker fundamentals and prompt overseas refiners to consider adjusting production levels.

·         Any signs of N70 price-premium holding at or rising from current levels would point to still-firm demand and incentivize overseas refiners to maintain higher output of very-light grade base oils.

·         Europe Group I export base oils price-premium to vacuum gasoil (VGO) falls, especially for light grades.

·         Brightstock price-premium to VGO stays unusually high, pointing to still-strong supply-demand fundamentals.

·         Group I SN 500 premium to VGO falls to lowest since early-April 2025.

·         Group I SN 150 premium to VGO falls to lowest since April 2024.

·         Weaker margins highlight increasingly wide disconnect between brightstock prices and light/heavy-neutrals prices.

·         Group I export margins remain higher than usual even with recent weakness.

·         Firm margins could incentivize refiners to maintain high output even with recent weakness.

·         US Group II domestic N600 premium to VGO falls to lowest in more than four years.

·         Fall in heavy-grade price-premium to VGO extends trend since margins peaked in H1 2023.

·         Fall in heavy-grade price-premium in Q3 2025 contrasts with higher premium in Q3 2024.

·         Fall in heavy-grade price-premium points to persistent disconnect between supply and demand.

·         Base oils margins typically trend lower in fourth quarter of the year, raising prospect of further pressure on heavy-grade margins.

·         Even at lower levels, heavy-grade margins remain high, sustaining incentive for refiners to maintain steady output of the product.