· US base oils export price-premium to feedstock/competing fuel prices extends fall at end-July 2025.· Weaker base oils export margins and signs of rising surplus supply could incentivize refiners to adjust output.· Steadier domestic base oils margins, and steady removal of surplus supplies in overseas markets, could instead curb any such moves..· Sustained wave of base oils exports coincides with and magnifies impact on lower domestic output in first five months of 2025..· Firm exports and lower output keep supply balanced-to-tighter heading into Q3 2025.· Extension of steady removal of surplus supplies in overseas markets would help to sustain those more balanced fundamentals.· Scenario requires US export prices remain at levels that facilitate such shipments.· Recent fall in US export prices facilitates such shipments.· Lower US export prices contrast with steadier US domestic prices..· Steadier domestic prices suggest domestic market faces more limited pressure from weaker domestic demand and rise in surplus supply.· Even so, widening gap between domestic and export prices could start to raise expectations of reciprocal adjustment in domestic prices to reflect weaker fundamentals.· Widening gap between domestic and export light-grade prices suggests persistently tight availability of Group II light grades could be easing.· Volume of premium-grade shipments from South Korea that is set to reach US in Aug 2025 shows signs of falling sharply from July 2025.· Any such slowdown could keep US Group III base oils supply at lower levels in Aug 2025..· Latin America’s base oils supply could get boost from signs of healthy flows from US in July 2025.· Supply could get further support from firm regional output that supports pick-up in shipments to neighbouring markets.· Any further slowdown in demand in region’s key markets would also leave supply lasting longer.· Argentina’s base oils exports rise to multi-year high in June 2025 and Q2 2025..· Surge in exports taps tight supply-demand fundamentals globally for Group I base oils.· Size of rise in exports is insufficient to balance out those tight fundamentals.· Size of rise in exports is more than sufficient to incentivize Argentina to maintain high base oils output and to focus on strong overseas demand.· Size of rise in exports points to large volume of latent Group I production capacity that was previously unused.· Argentina’s shipments in June 2025 include cargoes to Brazil and Nigeria.· Shipment bound for Nigeria arrives in H2 July 2025.· Shipment points to ongoing demand for Group I base oils in the West African country even with rise in US Group II exports to Nigeria over past year..· Europe’s Group I base oils supply could recover more rapidly as seasonal slowdown in regional demand coincides with closed arbitrage to overseas markets.· Any more permanent switch by blenders to using premium-grade base oils could add to pick-up in Group I supply.· Any such switch would be in response to and to avoid impact of sustained period of Group I supply-tightness in Europe.· Europe’s Group I base oils supply falls more than 10% in Jan-May 2025 from year-earlier levels even with recovery in supply in May 2025..· Tighter supply highlights impact of structural drop in Europe's Group I production capacity.· Drop in production capacity magnifies impact of any planned or unexpected plant stoppages in the region..· Europe’s Group II base oils supply could stay higher for longer.· Europe’s Group II base oils supply already rises to seven-month high in May 2025..· Supply rises on simultaneous pick-up in regional output and imports.· Europe’s Group II base oils prices hold firm or rise versus prices in US and Asia in recent months..· Increasingly feasible arbitrage suggests Europe’s Group II supply remains insufficient even with recent rise in output and imports.· Supply-shortfall suggests demand is key factor supporting higher prices.· Dynamic suggests any change in demand would require reciprocal change in supply to maintain balanced fundamentals. .· Europe’s Group III base oils supply could get boost from pick-up in shipments from Spain to northwest Europe in July 2025..· Several cargoes from Middle East and Asia also set to reach northwest Europe in H1 Aug 2025, adding to supply..US’ May base oils stocks fall.Argentina’s June base oils exports rise.UK’s May base oils output holds firm.Netherlands’ May base oils output rises.Global base oils margins outlook: Week of 4 August.Americas/EMEA base oils demand outlook: Week of 4 August.Base Oil News stories and analyses also available on the ICIS platform
