Global base oils margins outlook: Week of 11 August

·         Global base oils margins stay more mixed but mostly hold at levels that sustain incentive for refiners to maintain firm output of the lubricants feedstock.

·         Fob Asia light-grade base oils price-premium to Singapore gasoil extends rise, while heavy-grades stay more rangebound.

·         FOB Asia Group II light-grade price-premium to gasoil rises to highest since H1 June 2025.

·         Light-grade price-premium rises faster than in US and Europe, but from lower level.

·         Higher light-grade price premium partially counters impact of recent rise in gasoil premium to crude.

·         Higher light-grade price-premium could curb any incentive for refiners to focus on producing more diesel rather than light-grade base oils.

·         Higher light-grade price-premium balances out recent weakness of heavy-grade base oils price-premium, leaving margins at levels that likely sustain incentive to maintain high total output levels.  

·         China's domestic Group II N150 price-premium to Shandong diesel price rises, breaking out of recent, low range since H2 June 2025.

·         Price-premium rises at a time of year when buyers typically start to replenish stocks ahead of seasonal rise in demand in late-Q3.

·         Lower price-premium in recent weeks could have incentivized refiners to keep output at lower levels.

·         Lower output could magnify impact of pick-up in demand.

·         Any rapid reversal of price-premium in coming weeks could conversely point to sufficient supply or weaker-than-expected seasonal rise in demand.

·         CFR India Group II N70 price-premium to Singapore gasoil price rises to highest in more than two months.

·         Higher price-premium facilitates arbitrage, incentivises overseas refiners to supply more very-light grade base oils.

·         Higher price-premium points to firm demand, with outright prices ignoring any pressure from weaker gasoil prices.

·         Europe’s Group II heavy-grade price-premium to vacuum gasoil (VGO) edges up after slipping in July 2025.

·         Group II heavy-grade price-premium stays unusually high even after slipping in July 2025.

·         Group II heavy-grade price-premium to VGO continues to rise faster than Group II light-grade and Group I heavy-neutrals price-premium to VGO.

·         Dynamic points to increasingly firm supply-demand fundamentals for Group II heavy grades relative to feedstock prices, relative to other grades and relative to other regions.

·         US Group II light-grade export price-premium to VGO holds close to lowest since Q1 2025, when fundamentals were seasonally weak.

·         US Group II light-grade domestic price-premium to VGO holds in relatively narrow range, above lower levels in Q1 2025 but below levels in Q3 2024.

·         Steady-to-firm light-grade domestic price-premium to VGO curbs pressure on refiners to adjust output.

·         Sliding export price-premium to VGO could point to moves to maintain more balanced domestic fundamentals by clearing surplus volumes through the export market.