Refineries of course, have not stopped production over the past few weeks, although many have been running on reduced manpower, maintaining safe but continuous operations. Stocks of base oils have been building in storage at refineries, and producers have announced available barrels for January and beyond.

Last week, this report took the opportunity to look back at the outgoing year, and tried to identify dynamics that could affect base oil business and trade in the coming months. This week the report will try to look forward using a number of energy and base oil forecasts from the latter stages of last year, anticipating production schedules whilst taking into account planned maintenance for refineries producing base oils.

Starting with fundamentals, global crude and feedstock prices are being called to move lower during the first six months of the year, with additional price pressure being applied following the U.S. action in Venezuela and the arrest of President Maduro on drugs and arms charges. This would appear to be a political move, but Venezuela is still counted as holding the world’s largest crude reserves, and should U.S. oil companies return to Venezuela, having been kicked out in the mid-1970s, there could be massive implications for crude distribution and a realignment of supplies from countries such as China to the U.S.

Venezuelan crudes are mainly naphthenic rather than paraffinic, and are classed as heavier crudes that could be blended with lighter sweet crudes in refineries in the U.S. to produce an enhanced slate of petroleum products, which would ultimately be beneficial to the U.S. and the Trump administration.

The loser in this scenario would be China, which may have been the ultimate plan behind the extraction of Maduro and the eradication of the current government in Venezuela.

There could be other outcomes, with OPEC electing to bar Venezuela from being a member, or indeed Venezuela withdrawing from the cartel. These events will play out in coming months and years.

Turning attention to, Europe, the Middle East and Africa, finished lubricant blenders can be expected to continue moving away from API Group I usage to use of premium base oils such as Group II and Group III.

Polyalphaolefins (Group lV) could start to figure to a greater extent in some lubricant blending operations, since with PAO current prices much lower than historically seen, this could hasten the introduction of these grades into formulations for the new generation of finished lubes. Prices for these grades are currently marginally higher than fully-approved Group III+ base oils, enticing blenders to start using these products as an adjunct to the current slate of base oil grades.

This report will keep an eye on any indications of PAOs starting to play a more prominent role on the base oil scene, and will consider introducing pricing for Group lV base stocks into the report, should this become appropriate.

Base oil prices seem to face downward pressure as 2026 begins, with the possible exception of Group III oils with partial slate of finished lube approvals or with no approvals. This is purely a function of positive demand for these base oils.

Whatever happens to prices may vary between Europe, the Middle East and Africa depending on local factors. For example, Europe may continue to struggle economically, with main markets in countries such as Germany, France and the United Kingdom remaining dull while Mediterranean nations such as Italy, Spain and Greece experience positive growth as the year progresses. All of Europe could see massive changes if a peace accord is negotiated between Russia and Ukraine.

Middle Eastern markets will be affected by factors such as the conflict between Israel and Palestine. African markets appear to be buoyant across the continent, showing excellent potential in areas such as South and East Africa, whilst in West Africa positive signals are coming from emerging markets like Nigeria, Senegal and Cote d’Ivoire.

Group III projects are progressing and being considered in Saudi Arabia, and Germany, whilst at the same time there is potential increased Group III imports from new production in the U.S. and Asia-Pacific.

The future looks bright for many businesses in the base oil and lubricants markets, with the promise of growth and development in many areas of the trade, hence a positive note to end the foray into an otherwise unknown future.

Crude and Gas Oil Prices

Crude oil prices basically flatlined over the past week. As this report keeps mentioning, crude price levels are called to dip during the first half of this year, and with further complications following the U.S. sortie into Venezuela, perhaps the best approach is to stand back and observe.

Dated deliveries of Brent crude: $61.65/bbl, March front month
West Texas Intermediate: $58.25/bbl, February front month
European low-sulfur gas oil: $624 per metric ton, January front month

Source: London ICE late, Monday, Jan. 5.

Europe

Base oil business resumed this week, with an added flourish for companies to set out their stalls, looking to build, consolidate or perhaps expand  trade in existing or new markets.

There were few updates to prices during a short week, and prices in Europe were unchanged. It is anticipated that any new prices will emerge during the course of this week, with suppliers engaged in sending out updated availabilities and price indications for January, and in some cases for February and March.

The latest news from Hungary is that Mol restarted production Jan. 5, alleviating any supply pressures in Hungarian and surrounding markets. Your columnist is attempting to obtain updated prices from this supplier, which will indicate levels for Eastern Europe.

Bright stock remains tight around Europe, but initial conversations today indicate downward price pressure or both exports and intra-regional sales. Markdowns for bright stock are the only changes in European prices this week.

Group I

Exports, FOB basis
SN150: $635/t-$675/t
SN500: $700/t-$725/t
Bright stock 150: $1,125/t-$1,155/t

Northwestern Europe, FCA Antwerp-Rotterdam-Amsterdam
SN150: $785/t-$810/t
SN500: $865/t-$900/t
Bright stock 150: $1,245/t-$1,285/t

Eastern Europe, FCA
SN150: €773/t
SN500: €825/t
Bright stock: €1,134/t

Mediterranean prices, FCA
SN150: $835/t
SN600: $950/t
Bright stock: $1,380/t

Pan-European, FOB/FCA
SN150: €625/t-€675/t
SN500/600: €700/t-€745/t
Bright stock 150: €1,060/t-€1,085/t

Pan-European prices are assessed on an aggregate basis from levels in Scandinavia, Poland, France, Germany, Benelux, Spain, Italy, Greece and the U.K.

The euro’s exchange rate with the U.S. dollar was $1.17160 Monday.

Group II base oil prices are maintained at the new levels established just prior to Christmas, following the issuance of new prices from a major supplier. Levels are established at $1,025/t for 150 neutral and $1,200/t for 600N.

Further confirmation has been received that the European Union duty of 3.7% for Group II imports from nations without free trade agreements with the EU will be removed Jan. 28.

Base on comments received the past week, demand appears to be positive and may pick up further during January. Buyers let inventories run down during December, and are now looking to replace and replenish stocks ahead of spring.

Group II, FCA basis
110N: €800/t-€820/t
150N: €810- €825/t
220N: €835/t-€845/t
600N: €965/t-€1,020/t

These prices apply to a wide range of Group II base oils which can be sourced from within Europe, the U.S., the Red Sea and Asia-Pacific. Ranges refer to bulk shipments.

Group III base oils continue to show good demand, particularly for the 4 centiStoke grade. New cargoes have been arriving from Middle East Gulf and Asia-Pacific during the holiday period, and with stocks available for sale and delivery, it will be interesting to test how demand is shaping for 2026.

Prices remain as posted in the last report, but upward pressure may exist.

There are still no updates from suppliers regarding dates and plans for new production and additional barrels coming from Saudi Arabia and the U.S. Gulf of Mexico coast. It also remains unknown if barrels from U.S. producers will carry full slates of approvals. It will be interesting to see where prices are pitched relative to fully and partly approved Group III oils.

Group III values in Europe are unchanged this week. There are rumors that market share has been shifting from fully to partly approved grades due to the price differential.

Group III

Partly approved, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe
4 cSt: €1,165/t-€1,190/t
6 cSt: €1,135/t-€1,155/t
8 cSt: €1,125/t-€1,145/t

Fully approved, FCA Northwestern Europe
4 cSt: €1,610/t-€1,625/t
6 cSt: €1,595/t-€1,620/t
8 cSt: €1,585/t-€1,610/t

All above products sold on a delivered basis are subject to transportation charges, added to the prices above.

Rerefined Group III, FCA Germany
4 cSt:  €990/t
5cst : €990/t
6 cSt: €1,050/t

Baltic Sea

At the end of last week there were rumors of a cargo being prepared for loading out of St. Petersburg storage, but no vessel has been identified or chartered to load this parcel. It may be that this week will shed some light on this report.

Strangely, it would appear that most of available supplies of Russian base oils are being utilised in the domestic market, and that following significant damage to production and storage facilities at refineries dotted around Russia, there are reported shortages in some regions of the country.

No broker shipping reports show any vessels being listed for any exports of base oils to locations such as Turkey or West Africa, although one trader has loaded a cargo suggested to be Russian origin. True origin is unknown. No European source has been identified as being a possible supply source, and it is not considered that this particular trader has contacts and availabilities in the U.S. Therefore the deduction is that the cargo must be Russian origin.

The cargo may have been stored or transited through an Egyptian port. If of Russian origin, it would not have loaded out of the Baltic but may have been loaded out of a Sea of Azov port.

Notional prices for Russian exports through the Baltic are unchanged.

Russian Group I exports, FOB St. Petersburg, Vyborg (notional)
SN150: $625/t-$655/t
SN500: $660/t-$685/t

Black Sea & Turkey

No Russian base oil cargoes have been reported by shipping agents or importers in Turkey. Previously, traders involved in Russian base oils have commented that no availabilities were being offered.

U.S. sanctions on Lukoil and Rosneft are having short and longer term implications for base oil movements. The Lukoil companies registered in countries such as Germany, Slovakia, Bulgaria and Romania may have to be sold off, causing widespread losses to the Lukoil parent company.

There is little point in reporting historical Rosneft or Lukoil prices for the Turkish market. Tupras prices are unchanged this week, but updated values will be received later this week.

Group I

Tupras
Spindle oil: Tl 32,090.00/t plus VAT Tl 8,315.44/t
SN150: Tl 27,764.00/t plus VAT Tl 7,450.24/t
SN500: Tl 34,443.00/t plus VAT Tl 8,786.04/t
Bright stock: Tl 51,258.00/t plus VAT Tl 12,149.04/t

Sales incur a standard loading charge of Tl 9,487.20/t.

Group II, ex works from Turkish traders
110N and 220N: no current availabilities
350N: no offers
150N from Taiwan or Saudi Arabia: $955/t
500N/600N from Taiwan or Saudi Arabia: $1,175/t

Group III

Partly approved
Tatneft 4 cSt, FCA: €933/t (availability in doubt)

Fully approved
From Cartagena, Spain, CIF Gemlik: €1,675/t-€1,705/t.

Middle East

Luberef announced the completion of the maintenance turnaround at its Yanbu, Saudi Arabia, refinery and said it began start-up procedures Jan. 1. The turnaround is partly preparatory work for the new production of Group III base oils. Timing has not been verified but announcement about that may come around the time of two industry conferences scheduled in London next month.

Cargoes of around 18,000 tons to 20,000 tons continue loading out of Yanbu and Jeddah, Saudi Arabia, for receivers in Mumbai anchorage and Jawaharlal Nehru Port in India, while smaller cargoes of 8,000 tons to 10,000 tons of Group I and II move to receivers in the United Arab Emirates and Pakistan. Cargoes are being targeted at receivers in Singapore and Durban, South Africa. Smaller parcels, for example 3,000 tons of bright stock, will load during January for Alexandria, supplying under the EGPC contract. Other parcels destined for Aqaba, Jordan, and Port Sudan, Sudan, are planned for later this month.

Group I and Group II cargoes have arrived in the UAE from the U.S., South Korea, Thailand and Indonesia. Parcels are discharging into Fujairah and Hamriyah, UAE.

Problems remain for tankers berthing at Hamriyah, with sources confirming that waiting for a week or 10 days is not uncommon. These delays are not specific to base oil cargoes but also affect other petroleum products and chemicals using the storage facilities located at Hamriyah port.  

The comments received from sources in UAE regarding Iran and civil unrest appear to be confirmed from news of protests and demonstrations last week across Iran in a number of cities. Protests are mainly about the collapse of the rial and inflation, which is around 40%.

How this action will pan out is anyone’s guess, but militancy is running rife as the theocracy reacting with force through the Islamic Revolutionary Guards Corps without entering into discussions or negotiations with protesters.

Iranian Group I base oils are confirmed to being transported by trucks to destinations that include Iraq, Kurdistan, Syria and Eastern Turkey. This business is conducted through a warren of traders based throughout the region, with none being identified as yet. Traders in India have suggested likely parties, but with no substantiation, these traders cannot be contacted.

Russian cargoes are again missing from the UAE, with no cargoes sailing from Limas terminal in Turkey or from the Baltic. UAE base oil prices are mostly unchanged from last week except for small adjustments to some of the Group I grades.

Group I, CIF/CFR UAE ports
SN150: $875/t-$900/t
SN500: $925/t-$950/t

Group I cargoes are being purchased from traders based in the U.S. and in Switzerland, but also directly from producers in Thailand.

Group II price – for quantities sold FCA in the UAE and RTW on a delivered basis in the UAE and Oman – are adjusted lower this week.

Group II, FCA or RTW, UAE and Oman
110N, 150N and 220N: $1,255/t-$1,300/t
600N: $1,365/t-$1,395/t

Group II base oils are imported into UAE and other Middle East Gulf ports in Qatar and Bahrain from a number of  sources, such as the Red Sea, the U.S., South Korea and Singapore. The high ends of the ranges above refer to material being delivered by RTW in UAE and Oman, north of Khorfakkan and Fujairah.

Group III, FCA Hamriyah or Sharjah port, or RTW UAE and Oman
4 cSt: $1,225/t
6 cSt: $1,235/t
8 cSt: $1,255/t

Middle East Gulf Group III base oils produced in Al Ruwais, UAE, and Sitra, Bahrain are delivered in relatively small parcels of 3,000 tons-4,000 tons by sea into Hamriyah and Jebel Ali, UAE.

The ranges of Group III prices above include a reseller margin of $95/t covering storage, handling, insurance and a margin. RTW deliveries from distributors can incur an additional charge of between $20/t-$55/t, depending on delivery location and quantity.

Netbacks for Group III base oils loaded ex Sitra and Al Ruwais for distributor sales in Europe, the U.S., India and China are unchanged at $1,065/t-$1,085/t for 4, 6 and 8 cSt Group III grades.

Netbacks for gas-to-liquids Group III+ base oils ex Ras Laffan, Qatar, remain at $1,085/t-$1,100/t. Levels are given as indications only, since no distributors are involved in these cargoes, the product being mainly retained by Shell affiliates for in-house blending.

Middle East Gulf Group III netbacks are assessed using selling prices in known markets minus estimated marketing costs, margins, handling, storage and freight.

Africa

One Spanish refiner still issues very high numbers, but few buyers are queuing up to buy this availability. The supplier apparently does not have large quantities of each grade, but indications are for all grades – a SN150, SN600 and bright stock 150.

A large base oil cargo has loaded out of Europe (Rotterdam and Fawley, U.K.) for Durban, and it was anticipated that another cargo of around 19,000 tons of all types of base oil would load before year end for South Africa. Arrival dates are not yet available from ship’s agents in Durban.

The trader who specialized in procuring Russian cargoes in the past, has a 10,000-ton cargo on the high seas for Apapa port in Lagos, with the origin remaining a mystery. The cargo may have arrived into Apapa this week.

There are no sellers in Europe who would have the availabilities to offer a substantial quantities to fit the cargo split of SN150, SN500 and SN900.

Another trader with a 10,000-ton parcel on the high seas is canvassing the Nigerian market with low prices, without having the back up of a physical supply. This trader is looking to purchase another cargo of around 10,000 tons from U.S. suppliers, but latest news heard is that there are currently no suitable availabilities.

Prices heard in discussions are around $840/t for SN150, $900/t for SN500 and $1,030/t for SN900.

Three cargoes are now on the water for Nigeria: the two 10,000-ton parcels, from the U.S., and a large 18,000-ton cargo also ex U.S., all of which will supply the Nigerian market during the peak time approaching.

A shortage could develop for SN900, which has a noticeable price differential over SN500. Some receivers and a number of buyers and blenders have stated unwillingness to purchase at the former’s high rates.

The price differential between SN900 and SN500 will continue to be problematic unless and until bright stock prices fall to levels allowing SN900 to be blended and offered at $50/t-$60/t higher than SN500. That appears to be some way off since bright stock supplies are severely limited.

Bid numbers from buyers are at $825/t for SN150, $900/t for SN500 and $1,030/t for SN900, on the basis CFR Apapa.

The black market exchange rate for the Nigerian naira was NGN 1,442 to the dollar Monday.

Group I

Russian origin, CFR Apapa (availability uncertain)
SN150: $825/t
SN500: $895/t
SN900: $985/t

U.S. origin, CFR Apapa
SN150: $840/t
SN500: $900/t
SN900: $1,030/t

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly at pumacrown@email.com.

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

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