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By 2026, the base oil market will enter a complex phase characterized by changes in demand patterns, regulatory reforms, and adjustments to supply chains. Globally, there will be a trend of capacity expansion in Asia and Europe, while the United States will adopt a more cautious approach; mismatch between supply and demand and differences in regional efficiencies will become the key issues facing the market. The industry generally expects that the global base oil market will face both opportunities and challenges in 2026, with prices unlikely to exceed those of 2025; the base oil industry will continue to under pressure in the coming years. By 2025, although the base oil markets in Asia-Pacific and the Middle East will be affected by geopolitical tensions and tariffs, fundamental factors will still drive market trends. ExxonMobil’s expansion project at its refinery in Singapore has become a focus in the industry; the additional production capacity to be added by 2026 has been secured through long-term contracts with key customers, leaving little surplus supply available in the spot market. The industry suggests that if excess supply flows into the spot market, type 1 bright oil will be the most severely affected. The Asian regional market shows clear differentiation: in China, the growth rate of demand for lubricants is slowing down due to the spread of electric vehicles and industrial consolidation, but new facilities for producing grade 2 and grade 3 base oils are still being built; India is also expanding the production capacity for grade 2/grade 3 base oils at its Koyali and Haldia refineries, and it is expected that its import demand will decline slightly. In 2026, demand in Asia will remain stable, with base oils of type 2 and type 3 being the key categories. On the supply side, there are no major maintenance plans for base oil of type 1, ensuring stable supply; however, maintenance is required for key facilities for oil of type 2 – for example, a refinery in South Korea with a capacity of 1.3 million tons per year will be shut down at the beginning of April; a refinery of type 3 and type 3+ in Malaysia is scheduled to be shut down for maintenance during the middle of the year. Overall, supply growth relies on expanded production capacity, while demand growth is weak; market fundamentals are likely to reach equilibrium, resulting in moderate price fluctuations. In Europe, during the fourth quarter of 2025, the European base oil market continued to face pressure; an oversupply, coupled with high profits from distillates, forced producers to adjust their strategies. There is an oversupply of base oils across all categories, while the price differential for distillate cracking has risen, significantly increasing the incentive for refineries to shift their production. European traders say that refineries are generally reducing the production of base oils while increasing diesel output, with some light base oils even being blended into diesel to boost profits. Polska **Oil Company’s expansion plans represent a key factor in the European market; its 400,000 tons per year production facility for category II base oils at its Gdańsk refinery is set to come online in the first quarter of 2026. Analysts note that overall demand for lubricants in Europe is declining, and new production capacity will help the region achieve near-self-sufficiency in category 2 oils, thereby significantly reducing its reliance on imports. Viewpoints from U.S. market participants are relatively cautious. By 2025, U.S. production of base oils will provide strong support for the global supply of category II base oils, and this trend will continue into 2026. A former refinery executive said that refineries will continue to produce until the excess capacity can no longer be absorbed, but the addition of new production capacity globally will impact U.S. exports. With the new plants in Poland and Singapore coming online, competition in the United States’ traditional export markets such as Europe and India has intensified, prompting U.S. blenders to adopt a cautious attitude toward the base oil market in 2026. The industry believes that trading in the base oil market will remain sluggish in January, with demand likely to recover only by March. The industry generally expects that the basic situation in 2026 will not improve compared to 2025, and the sector will continue to face pressures in the coming years.