Americas/EMEA base oils supply outlook: Week of 27 October

·         US Group II base oils prices hold firm vs VGO prices.

·         Firm base oils margins sustain incentive for refiners to maintain high output.

·         Supply set to get further boost following expected completion of plant-maintenance in H1 Nov 2025.

·         Quieter-than-usual Atlantic hurricane season already leaves market with larger-than-expected stocks built up in preparation for weather-related disruptions.

·         Ongoing shipment of large cargoes to markets like India and Pakistan could help to remove some of those stocks, leaving market more balanced. 

·         Any extension of recent disruption to shipments to Mexico could force suppliers to target other overseas markets instead.

·         US Group II light-grade export price-discount to domestic prices widens in H2 Oct 2025.

·         Widening export-price discount points growing pressure from surplus supply.

·         Even so, US Group II light-grade export price remains high relative prices in markets like India, especially compared with heavy-grade prices.

·         Supply in US and Europe could get boost from any slowdown in shipments to Singapore.

·         Singapore’s imports from US and Europe combined rise in Q3 2025 to highest level in more than four years.

·         Rise in imports adds to higher-than-usual shipments from US and Europe to Singapore over past year.

·         Rise in imports from Europe and US is unusual, with shipments accounting for unusually large share of Singapore’s total imports this year.

·         Timing of US and Europe’s rising share of Singapore’s imports suggests the supplies are linked to start-up of new unit in the island-state.

·         Recent start-up of new unit in Singapore and expected rise in domestic output duly likely to have larger impact on shipments from US and Europe than on imports from other markets.

·         Any subsequent slowdown in shipments to Singapore would leave more of those supplies in US and Europe.

·         Europe’s base oils supply shows signs of increasingly ready availability of all grades.

·         Europe’s Group I base oils supply shows mixed signals.

·         Firmer Group I export prices relative to prices in markets like Middle East and Asia make arbitrage less feasible, pointing to easing pressure from surplus supply.

·         Europe’s increasingly weak Group I domestic base oils prices versus export prices instead point to slack demand and ready availability of supply.

·         Either way, Europe’s firm Group I export prices boost incentive for buyers in markets like West Africa to line up supplies from other sources instead.

·         Spot shipments to Nigeria in recent weeks include cargoes from US, Egypt and Argentina, reflecting that dynamic.

·         Ongoing slowdown in Europe’s base oils shipments to South Africa could impact both Group I and Group II base oils.

·         Europe’s base oils exports to South Africa fall in Jan-Aug 2025 from year-earlier levels.

·         Dip in shipments contrasts with rise in exports from US to South Africa.

·         Any extension of that trend could add to pressure on Europe's Group II supplies amid expected slowdown in flows to southeast Asia in coming months.

·         Europe’s Group II base oils prices maintain steep premium to prices in US and Asia, sustaining attraction of moving more shipments to the region.

·         Europe’s imports from key sources of Group II base oils revert to more typical levels in Aug 2025 amid pick-up in flows from US.

·         Imports in Oct 2025 set to get further boost from arrival of arbitrage shipment from Taiwan earlier this month.