· US base oils prices fall relative to feedstock/competing fuel prices following recent surge in crude oil prices.· Dip in US export price-premium to vacuum gasoil in June 2025 contrasts with sustained surge of price-premium in Q2-Q3 2024..· Weaker price-premium points to softer supply-demand fundamentals at end-Q2 2025 compared with year earlier.· Rise in outright Group II export prices cushions size of drop in base oils margins.· Rise in outright Group II export prices points to tighter supply, curbing need to keep open the arbitrage to markets like Africa and India.· Rise in outright Group II export prices coincides with easing supply-tightness in other regions like Asia.· Rise in outright export prices precedes seasonal slowdown in demand in most markets.· Dynamic likely to limit any pressure on prices in destination markets like India to rise to keep arbitrage open.· A less feasible arbitrage could trigger faster rise in surplus supplies in US, combined with fewer outlets to clear those supplies..· US Group III base oils supply could stay tighter at least until start of Q3 2025 amid slowdown in shipments from South Korea and Middle East.· South Korea’s base oils exports to US fall to four-month low in May 2025..· Fall in shipments coincides with Group III plant-maintenance work in South Korea in May-June 2025.· Group III plant-maintenance work in Middle East in Q2 2025 complicates ability for US importers to boost supplies from that market to cover for slowdown from South Korea.· Any disruption or delay in Group III base oils shipments from Middle East in coming weeks would leave US supply tighter for longer..· Latin America’s base oils supply switches from tightness early this year to surplus in Q2 2025.· Latin America’s base oils supply holds close to 21-month high in April 2025, after staying lower than usual in early-2025..· Higher supply and weaker lube demand leaves Latin America facing large surplus in April 2025 for second month..· Surplus supplies help to replenish stocks that tightened early this year.· Any extension of surplus supplies, amid shrinking demand and replenished stocks, could put pressure on regional output or on prices to incentivize drop in supply..· Europe’s Group I base oils supply likely to be more readily available in coming weeks as round of plant-maintenance work in H1 2025 draws to a close.· Europe’s Group I base oils exports to markets outside the region already recover to three-month high in April 2025..· Exports rise as surge in shipments from UK counter slump in supplies from Italy.· Exports rise even during/ahead of plant-maintenance work, pointing to more-than-sufficient volumes to cover regional demand at time of year when fundamentals are tight..· Europe’s Group II base oils supply likely to be readily available amid healthy regional output and steady shipments from US in Q2 2025.· Europe’s imports from key sources of Group II base oils fall to three-month low in April 2025, coinciding with round of plant-maintenance and seasonal rise in demand in US at start of Q2 2025..· Rise in US exports to Europe in April 2025, and Europe’s increasingly firm Group II base oils prices relative to other regions, likely to sustain sufficient supplies in the region..· Europe’s Group III base oils supply could face disruption if Israel-Iran war starts to impact shipments from the Middle East region.· Concern about any such disruptions could anyway incentivize buyers to eye supplies from other sources instead.· Europe’s Group III base oils imports from Middle East hold steady in April 2025 in narrow range for third month..· Firm volumes, and Europe’s high share of Group III supplies originating from Middle East, highlight its exposure to any supply disruptions in that region.· Any drop in flows from Middle East would coincide with pause in premium-grade shipments from Spain since early-June 2025..Latin America’s April lube demand falls.S Korea May base oils exports to US fall
