Base oils and waxes
Overview
As the world pivots towards decarbonisation, challenges and opportunities loom for base oils production and demand. Staying on top of this market is more important than ever to realise these opportunities and mitigate pricing risk.
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Latest base oils and waxes news
Browse the latest market moving news on the global base oils and waxes market.
Viewpoint: Base oils oversupply tightens US margins
Viewpoint: Base oils oversupply tightens US margins
Houston, 2 January (Argus) — A global structural oversupply of base oils and finished lubricants weakened US margins throughout 2025, with downward pressure expected to continue into 2026. Global supplies of Group II base oils increased in 2025 as a result of new output from a Singapore refinery, while production from India is also expected to increase in 2026. The increased production is leading to more competition on the export market globally and creating more surplus among US refiners for the domestic market. Base oil demand also weakened in 2025, particularly for Group II grades, due to several factors. More consumers are using passenger car motor oils derived from Group III base oils given its increased performance, which resulted in weaker demand for Group II N100. Demand for mid-viscosity grades also fell due to reduced trucking and agricultural activities, while demand for high-viscosity grades waned on reduced industrial and manufacturing activity. The increase in supply and slowdown in demand have weakened base oil premiums to competing fuels, especially in the fourth quarter. The spread between the Argus US domestic spot N100 and Argus four-week average US Gulf coast diesel narrowed to an average 88¢/USG in 2025 through mid-December, down from 98¢/USG in 2024. Base oil premiums to diesel typically dictate how much base oil is produced as diesel, gasoline and other products produced at fluid catalytic crackers compete with base oil for feedstock vacuum gas oil (VGO). Base oil premiums over diesel trended lower in the fourth quarter, hitting a 20-month low in late November at 48¢/USG before rebounding to 61¢/USG in mid-December. Base oil producers are closely watching the spread to see if they can reduce base oil output in parts of 2026. The overall buildup of global Group II supplies and weaker lubricant demand also pushed US refiners to lower their export prices. The Argus US Group II N100 export price averaged $2.54/USG in 2025 through mid-December, down from $2.77/USG in 2024, further eroding overall base oil margins. This increased surplus supply within the US market also led to increased discounting, particularly for term volumes to domestic customers. This is expected to continue into 2026, with market participants saying US refiners are offering steeper discounts on 2026 contracts compared with 2025 deals. Some of the increased Group II surplus is expected to be offset by increased Group III production in the US. Some of that production will come from existing Group II streams and create a yield loss on Group II output, particularly for low- and mid-viscosity grades. Base oil margins relative to feedstock VGO were more attractive on a domestic basis, but fell when considering base oils sales into the export market. The spread between the Argus US domestic spot N100 and Argus four-week average low-sulphur VGO averaged $1.22/USG in 2025 through mid-December, in line with previous year values. Argus US export spot N100 margins in 2025 fell to 32¢/USG, down from 39¢/USG in 2024. By John Dietrich Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Weak demand keeps US N220 below N100 in 2025
Weak demand keeps US N220 below N100 in 2025
Houston, 29 December (Argus) — US N220 base oil held a discount to N100 base oil for the entirety of 2025, marking the first time mid-viscosity grades have averaged below light-viscosity grades for a full year. Weaker demand for mid-viscosity grades used in trucking and agriculture pushed their prices to a discount to lighter grades starting in July 2024, with the discount holding since then. The Argus US Group II N220 domestic spot price averaged a discount of 30¢/USG to N100 in 2025. The two grades averaged at parity in 2024. N220 in 2019 averaged a premium of 6¢/USG to N100, but lockdowns during the Covid-19 pandemic in 2020 resulted in a significant drop in demand for N220. Demand from industrial and agricultural sectors has fallen further since the pandemic. The weekly average N200 spot price fell by 54¢/USG in 2025 from a year prior. The N100 spot price fell by 25¢/USG. Group II N220 demand has weakened in the past two years because of softer demand from the heavy-duty engine oil (HDEO) market and inconsistent demand from the agricultural sector. HDEO demand is closely tied to trucking activity, which is declining because of growing economic weakness in the US. Agricultural activity has also slowed because of reduced exports from the US for several key crops. The spread change is mostly attributed to lower N220 demand, but some refiners also reduced their output of N100 in 2024-25, tightening spot supplies of the grade. Multiple US producers have prioritized Group III production starting in 2023. This caused a yield loss on Group II light grades in particular and elevated the spot price compared to N200. Group II N100 supplies are starting to increase, but the initial yield loss from Group III production is keeping spot volumes more limited. The oversupply of N220 is expected to continue into 2026 because of a lack of demand growth in its key sectors. Some market participants are expecting that there will be more length on N100, so the spread will likely narrow. Additionally, US refiners are not seeing increased opportunities to export N200 at higher prices because of global oversupply of Group II base oils. This oversupply on the global market is expected to remain throughout 2026. By Karly Lamm and John Dietrich Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
BP sells 65pc of Castrol lubes business for $6bn
BP sells 65pc of Castrol lubes business for $6bn
London, 24 December (Argus) — BP has sold 65pc of its Castrol lubricants business to US investment firm Stonepeak, for up to $6bn. The UK major had been looking to sell Castrol for an 11-digit dollar sum after launching a strategic review of the business in February. The company said the deal announced today brings to $11bn the disposals it has made as part of a $20bn divestment programme it is carrying out over 2025-27. The proceeds from the Castrol transaction will be allocated to reducing BP's net debt, which was $26.1bn at 30 September. The company has a target to reduce this, excluding debt from lease liabilities, to within a $14bn-18bn range by the end of 2027. The deal with Stonepeak gives Castrol an enterprise value of around $10.1bn. BP's net proceeds of $6bn includes around $800mn for the pre-payment of future dividend income in the short to medium term that will come from its retained 35pc stake. BP said this retained interest will give it exposure to Castrol's growth plan, "which builds on a strong track record of nine quarters of consecutive year-on-year earnings growth". Castrol markets finished lubricant products in over 150 countries across the automotive, marine, industrial and energy sectors, and has been expanding in recent years to include re-refined base oils (RRBO) in its portfolio. BP is locked into retaining the 35pc stake for two years, after which it will have the option to sell. BP interim chief executive Carol Howle noted that a thorough strategic review of Castrol generated extensive interest, and the 65pc sale to to Stonepeak "allows us to realise value for our shareholders, generating significant proceeds while continuing to benefit from Castrol's strong growth momentum." Last week BP announced current Woodside Energy boss Meg O'Neill's appointment as its chief executive from 1 April 2026. BP's chairman Albert Manifold, who joined its board in October, said O'Neill's appointment "creates an opportunity to accelerate our strategic vision to become a simpler, leaner and more profitable company." By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Viewpoint: Rising premium base oil supply to target EU
Viewpoint: Rising premium base oil supply to target EU
London, 23 December (Argus) — European premium base oil spot prices could face downwards pressure in 2026 from increased competition as global supply rises and import duties are removed. Average Group II European spot prices have fallen steadily since the end of April, by 14pc to €932.50/t assessed on 12 December. This is mostly owing to muted demand but exacerbated by a weakening US dollar against the euro as volumes are bought on a dollar basis and sold in euros in Europe. A persistent supply overhang from the US saw exporters increasingly target European buyers. This trend looks to continue into 2026 as the EU looks to remove a 3.7pc import duty on US Group II shipments. This is part of EU-US tariff negotiations, with EU states showing broad support for the duty removal of a large package of US goods, including base oils. A European parliament vote on this is slated to take place, probably in late January. Europe is a net importer of Group II base oils, with ExxonMobil's 1mn t/yr refinery in Rotterdam the only northwest European production site. Base oil and finished lubricants exports to the EU and UK made up on average 14pc of US total exports since 2020, EIA data show. Freight rates will again play a part in deciding how much product arrives in Europe in 2026. Rates from the US to Europe have been falling since the summer. Argus assessed 40,000t specialised chemical tankers on the route at an average $38.08/t in October, down by 15pc from August, and 5,000t part-cargo assessed rates fell by 10pc in the same time to average $69.50/t. Should rates continue to fall and the EU remove duties, US shipments to Europe are likely to increase. European prices are the highest globally. Supplies of N600 are at a $463.50/t premium to US equivalents and at a $404.50/t premium to Asia bulk, as assessed on 12 December. Global Group II production is likely to rise in 2026. Polish refiner Orlen will expand its Gdansk facility with an additional 450,000 t/yr, Saudi Arabia's Luberef will expand its Yanbu refinery by 100,000 t/yr, and ExxonMobil's Jurong, Singapore, plant expansion is slated to come online fully by year-end 2025. All these will probably target the highest price region, Europe, for their additional capacity. Spot prices for Group I are also ending 2025 on a downwards trend, as weak demand offsets structurally tighter supply. But this could reverse in early 2026. Orlen will undergo a refinery-wide maintenance for 60 days in the first quarter, affecting output at its 250,000 t/yr Group I unit at Gdansk. EU sanctions on refined products using Russian crude has seen diesel prices rise. The price spread of the premiums Group I SN 150 and diesel carry over the feedstock vacuum gasoil (VGO) narrowed to average $95/t in November, from $233/t in August. Should this continue refiners are likely to prioritise diesel output over base oils. Several European refiners are already pivoting away from base oil production, curbing supply availability and adding upward price pressure. But minimal scheduled maintenances in 2026 is likely to enable supply to recover, and a weak economic outlook should see demand remaining steady. By Gabriella Twining Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
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