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Global base oils supply sank to a 16-month low in June, reversing from a five-year high in March in just three months
Middle East supply fell to its lowest in more than seven years as a Group III shortfall outweighed rising flows from Saudi Arabia, with the disruption's indirect effects reaching across global markets
Group II and Group III price premiums surged across regions, a gap unlikely to narrow until supply fundamentals recover closer to where they stood at the start of the year
Global base oils supply sank to a 16-month low in June, as a slump centred on Middle East Group III shipments spread into other grades and regions.
Total supply fell to less than 2.60 million tonnes, the lowest level since February 2025 and the second-lowest since June 2023, EIA, ANP, METI, Petronet and other government data showed.
The decline marked a second straight year-on-year drop, reversing a six-month run of gains that had lifted supply to more than 3.10 million tonnes in March, the highest level in at least five years.
The slump traced mainly to the Middle East's Group III collapse, but its effects have extended far beyond that region and grade, with indirect repercussions for feedstock availability and output across global markets.
A separate bout of plant maintenance in the Americas added to the drop, even before factoring in those wider repercussions.
Key Highlights
Asia's supply fell to less than 930,000 tonnes, the lowest level in 11 months, as shipments from Singapore, Indonesia and Taiwan all eased.
· Europe's supply held relatively steady at more than 370,000 tonnes, close to where it has stood for most of the past six months.
· Americas supply dipped as plant maintenance in Brazil combined with US output falling to a 14-month low.
· Middle East supply fell to its lowest level in more than seven years, with a slump in Group III shipments outweighing a rise in flows from Saudi Arabia.
· Supply was around 70,000 tonnes, down from more than 90,000 tonnes in May and typical monthly volumes of more than 250,000 tonnes in the year to April.
Market Repercussions
The market had been preparing for a steady rise in supply over the coming year and the challenge of absorbing it. Instead it got a sharp drop.
That and the speed of the reversal, from a multi-year high in March to a 16-month low three months later, are what's proving hard to absorb.
That challenge has shown up in prices, with Group III premiums globally widening against every other grade. Group II premiums have also widened sharply, with European prices moving further above US and Asian levels, while US prices have moved further above Asia.
Those spreads are unlikely to narrow until the Group III shortfall eases and wider supply fundamentals recover toward levels seen at the start of the year.
