US base oil exports to Mexico hit record high

Market: Oil products
31/01/25

US base oil and lubricant exports increased in October because of steady domestic production, weaker demand and an effort by refiners to reduce inventories.

A record-high volume went to Mexico, the biggest export outlet for US refiners.

Base oil and lubricant exports totaled 4.07mn bl (113,355 b/d) in October, up by 33pc from year-earlier totals of 3.07mn bl, according to the Energy Information Administration (EIA). Domestic exports also rose by 16pc month-over-month from 3.52mn bl in September.

Export demand picked up in October because refiners pushed more surplus into the global market in efforts to balance inventories ahead of the year-end. Minimal production issues from the US Atlantic hurricane season lengthened domestic inventories and added further downward pressure on pricing.

US base oil exports to Mexico rose to a record-high 2.01mn bl from 1.54mn bl a year earlier, an increase of 26pc. Monthly exports also climbed by 85pc from September levels of 1.09mn bl.

The previous record high for base oil and lubricant exports to Mexico was 1.93mn bl in March 2024. October was the first month when more than 2mn bl of exports went to Mexico.

Diesel prices in Mexico rose in October, creating a wider arbitrage for low-viscosity Group II base oils to target the Mexican diesel extender market.

Base oil exports to Brazil, the second-highest recipient, rose to 399,000 bl in October, up by 11pc from 358,000 bl a year ago. Exports rose by 47pc from September levels of 272,000 bl.

Demand from Brazil remained strong for Group II grades and was firmer for Group III grades because of lower Group III prices from US sellers.

Base oil exports to Belgium, France and the Netherlands fell to 158,000 bl in October, down by 72pc from 568,000 bl in September.

Base oil exports to Belgium, France and the Netherlands totaled 158,000 bl in October, an 18pc decline from year-earlier levels. Monthly exports also fell 72pc from 568,000 bl in September.

Export demand for US volumes into Europe was weaker because of ample supplies in the region and lower demand ahead of year-end inventory destocking efforts.

Exports to India in October were 14,000 bl, an 81pc decrease from September levels of 74,000 bl. US refiners declined to target the India market because of lower prices being offered by South Korean refiners into India.

Base oil exports to Nigeria rose to 213,000 bl, more than four times September levels of 53,000 bl as lower freight to Africa compared with India made it a more attractive market.

By John Dietrich and Karly Lamm

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