EMEA Base Oil Price Report


Closing in on the end of its second week, Russia’s invasion of Ukraine is causing some of the most serious armed fighting in Europe since the end of the Second World War. Vast swathes of people are being distressed and driven to flee Ukraine for the safety of the nearby countries such as Moldova, Poland, Hungary and further afield into other European refuges.

Economic sanctions have been imposed by many nations, and the effects of these sanctions is starting to impact the Russian economy through curbs on banking and the transfer of international payments. In the medium to longer term this could limit travel and shipments of goods from Russia.

As this report is being written, a number of Western governments are looking to ban imports of Russian crude and petroleum products, a move that could have devastating effects on the Russian economy but also a vast supply chain, leading to problems affecting end users throughout Europe and beyond.

Many refineries such as those in Eastern Europe are dependent on the supply of Russian Urals crude, and without this supply source many operations would have to close down since no viable alternative supply sources are available on such short notice. Many of the eastern refineries are pipeline fed with no infrastructure to adopt alternative means of crude supply.

Base oils will be hugely affected if such a ban is sanctioned, both from the direct supply of export barrels of base oils from Russian refineries to outlets in the Baltic and Black Sea regions. The absence of Russian base oils could spike a critical supply situation for API Group I base stocks since Europe finds itself very short of these grades at this time, with several prime suppliers unable to currently produce, and others embarking upon maintenance turnarounds that will further shorten up an already extremely tight market.

The real shocks are hitting markets right now as crude and petroleum products move towards all-time highs on the back of the debate over the banning of Russian exports. The markets are witnessing minute-by-minute gains in crude prices, escalating at a frightening rate across all parts of the globe.

The effects of these increases in crude and feedstock levels are exerting upward pressure on base oil prices.

Dated deliveries of Brent crude have risen to $123 per barrel, now for May front month settlement. West Texas Intermediate crude moved in tandem to $119/bbl, still for April settlement.

Meanwhile European ICE low-sulfur gas oil has hurtled upward to $1,289 per metric ton, trading in the last few days of March front month. To put these prices in perspective, low-sulfur gas oil values are around three times as high as recorded 12 months ago when crude levels were around $55/bbl. These prices were obtained from London ICE trading late March 7.


European Group I export prices would start to rise dramatically were it not for one reason, there are few, if any, sellers who have quantities of Group I grades to offer for export destinations. With all the producers concentrating on supplying the domestic markets and with a dearth of availabilities for Group I grades, there are no offered prices around at this point small cargoes have been offered intra Europe, for example imported products going into Turkey, but these deals were completed some days if not weeks ago, meaning that if availabilities were around right now the prices would be much higher than negotiated prior to the Russian incursion into Ukraine.

With lost production from sites such as Livorno in the Mediterranean, and the north of Europe about to miss out on supplies from Gdansk refinery due to a turnaround starting on the 12th of March for a couple of weeks. The cessation of supplies of Russian export barrels would have a dreadful effect of the Group I markets within Europe, and with limited opportunities for bringing in Group I base oils from sources out with Europe, the future looks grim.

Prices are very difficult to read with no offers. the only prices possible to record are those on deals which have been completed prior to the Ukraine situation. SN150 prices are pushed higher, with FOB price levels assessed between $855/t-$870/t, with SN500 prices also higher with numbers ranging between $1005/t-$1025/t. 

Bright stock FOB prices are reported on a nominal basis in a range between $1275/t-$1325/t.

It is important to consider that were there quantities of material available for export trades then prices contained in offers this week may possibly be close to those last seen during the middle of 2020 with Group I neutrals in excess of $1800/t and bright stock over $2200/t, such is extent of the price rises in petroleum products over the last few days.

Domestic markets in Europe are feeling the brunt of the rapid price rises for crude and feedstock with sellers pushing number ever higher in response to limited availabilities, even amidst mediocre demand levels. Some sellers acting in the spot market have requested prices for ad hoc truck sales at around €500/t-€700/t higher than two weeks ago, but there are few takers who are willing to pay these levels, citing the reasons that as blenders they have made commitments to buyers and end-users of finished lubes on prices and delivery and cannot pay over the odds for prompt supplies of Group I grades.

Where the market takes prices next is a real guess, with some comments from sources suggesting that this is a temporary spike caused by the Ukraine situation, and that with resolution to that crisis markets will return to normal. These comments are spoken more in hope than reality with prices set to move ever higher during the remainder of March.

With no reported activity in the export sector and only prices agreed pre-Ukraine invasion, the differential between the two markets has been nominally extended, with the differential moving higher due to domestic numbers rising. The differential is now assessed between €250/t-€385/t. This wide variation is only because of the shortage of material offered for export and the rapid upward adjustments being made by sellers as a result of spiraling crude and feedstock prices.

European Group II base oil prices are starting to respond to the vast increases to crude and products, by starting to push higher although the reaction has been slower than perhaps the Group I response. This group of base oils was not particularly tight prior to the Ukrainian disaster, hance with enough supplies to cover requirements, the push as not been as forceful. However, it is assumed that prices for Group II grades will now start to rise quickly over the next few weeks should crude and product prices remain at current levels, or even move higher still.

Producers in Europe and major importers are already talking new levels for forward sales, and with reports that sellers are finding it difficult to keep up with events, there may be a time delay before higher numbers kick in. The mood is that there is only one direction for prices to move, upwards. The real test is how fast sellers will move into action to push prices higher, since this is as sure as can be.

Group II euro prices are higher this week, but with the threat that numbers will start to rise quickly unless the heat is taken out of the petroleum and gas markets. Exchange rates have also played a part in driving prices higher with the euro weakening against the dollar. Levels are assessed between $1290/t-$1325/t (€1195/t-€1225) in respect of the three light vis grades (100N, 150N and 220N), with the higher vis grade (600N) in a range between $1520/t-$1575/t (€1405/t-€1460).

Prices are in respect of a range of Group II base oils, including European and U.S. grades, in addition to imports from Middle East and AsiaPac.

European Group III markets are preparing for large increases to be applied from April 1 with most suppliers holding agreed prices for March at the levels negotiated towards the end of February. Although some buyers have contracted supplies for three months or more, suppliers are saying that they cannot hold down prices indefinitely, and replenishment stocks into the hubs around Europe will be subject to review and adjusted to reflect increasing raw material costs, which have at least doubled since the start of the Russian ingress into Ukraine.

Since this market does not reflect a high turnover of spot trade contracts will take time for prices to adjust, but adjust they will, and the moves will higher.

The additive shortfall is proving detrimental to some blenders with some commenting that they are still unable to obtain full quantities of the requisite additives. There is a vicious circle in place here with additive manufacturers commenting that they in turn are unable to buy the quantities of Group III required in the production of the additive grades, hence the shortfall in the market. This situation is forecast to improve over the next two months, but if there is a ban on Russian exports, then this situation will only be exacerbated further.

Prices in respect of the range of partly approved Group III base oils are firmer for March. Assessments are now put between €1525/t-€1620/t. The 6 cSt and 8 cSt grades are between €1595/t-€1620/t, with 4 centiStoke base oils ranging between €1525/t-€1575/t. Prices are in respect of FCA supplies ex Antwerp-Rotterdam-Amsterdam/northwestern. The lower end of the prices for 4 centiStoke oils pertain to Russian exports of this grade coming on to the European market.

Group III base oils currently holding full European OEM approvals are priced higher, with fully approved 4 centiStoke grades in a range between €1575/t-€1620/t, with 6 cSt and 8 cSt oils between €1625/t-€1750/t.

Baltic and Black Seas

Baltic reports are sketchy, with many players trying to assess if there will be an export ban on Russian petroleum products, which of course will include base oils. For the reasons explained previously, this decision could spell disaster for many parties, the refineries, the traders who stock and supply base oils from Baltic ports and the general market in Europe and further afield in locations such as Nigeria which have become dependent on Baltic supplies in the light of a difficult supply scene within mainland Europe. Cargoes of material from Riga, Liepaja, and Kaliningrad are seen coming on to the market in Antwerp-Rotterdam-Amsterdam and the east coast of the United Kingdom.

There is also another angle developing where regular buyers of Russian barrels are refusing to take further cargoes in protest at the Russian invasion of Ukraine. This in turn is causing bottlenecks in the supply chain, with cancellations of trains and movements from refineries to storage. At this point in time there is an inquiry for around 10,000 tons of material to load from Riga and Antwerp-Rotterdam-Amsterdam for Nigeria, and it is considered that the largest part of this cargo would load from the Baltic due to lower prices.

Baltic prices pushed higher this week, with pressure on the supply chain remaining intact. The full effect of the latest crude and feedstock rises has not filtered through FOB levels as yet. The Baltic market is in a state of flux, with prices difficult to exactly define this week. Some sellers are moving levels swiftly upwards, while others appear more keen to move material out of tank before any sanctions or hardening attitudes against Russian base oils are brought to bear.

The Ukrainian situation cast doubt on the viability of future supplies, should sanctions be brought to bear. Some buyers in Antwerp-Rotterdam-Amsterdam were intent on laying down stocks in anticipation of a shortage of availabilities, but many of the blenders in Benelux decreed not to purchase Russian barrels from distributors, these products being ultimately supplied from sources such as Rosneft, Gazprom and Lukoil.

Baltic Sea FOB prices for Russian exports are raised, with SN150 moving upwards by some $50 per metric ton, now assessed at $795/t-$825/t. Similarly, SN500 is now indicated at $900/t-$945/t. Quantities of SN900 are estimated at around $1,025/t.

Black Sea trade is thin and very subdued, apart from news that in Turkey the local Tupras refinery started making base oils available for picking up in trucks. Reports are that prices are moving rapidly, with short validities on any sales, as literally changes are occurring on an hourly basis. According to one source, the prices rose by some 900 Turkish lira/t from morning to afternoon. With all raw materials in the form of crude purchased in U.S. dollars, there is mounting pressure on two sides. First is the Ukrainian scene and secondly is the galloping inflation rate that is out of control and does not appear to be getting addressed by government.

A couple of small quantities of base oils have gone into Turkey from a European major. One cargo of around 1,700 tons went into Derince from a Mediterranean source. Another composite cargo loaded out of two northwestern European ports and discharged into Alexandria, with a small parcel going into tank in Gebze, Turkey. The supplies are small and were arranged prior to the Ukrainian invasion. It can be assumed that the prices may have been doable by importers and the banks. Indications for the two small parcels are given CIF Turkey at $885/t for quantities of SN150/100, with SN500 at $1,025/t. These levels would not be repeated again today, with European FOB numbers vaulting higher.

Imported Group II grades sold through distributors on an FCA basis are priced at €1,445/t-€1,495/t for the three lower vis products, with 600N at €1,525/t-€1,560/t. Group III base oils sold on the same ex-tank basis have FCA levels at around €1,665/t-€1,695/t for partly approved grades, with fully approved Group III grades supplied from Spain at €1,720/t-€1,775/t.

Middle East

New routes and trades appear to be the name of the game in the Red Sea, with two cargoes loading simultaneously last week for receivers in Durban. A total of around 11,000 tons was dispatched in the two parcels, with a further 4,500 tons parcel planned to load in the next week or so for the same destination. These are the first cargoes sold into the South African market from this Red Sea source.

Middle East Gulf reports contain news of two Iranian base oil movements, the first evidence of base oils being exported from that country for some months. Both cargoes are discharging in the west coast of India, with the first going into Mumbai anchorage, and the second into Hazira. The cargoes were 3,000 tons each of SN500, with a follow-up parcel of 5,000 tons moving into Hazira around this week.

There is an interesting shipping enquiry for 5,000 tons of base oil to load out of Hamriyah and discharge into the U.S. Gulf Coast. This is a very strange enquiry on two fronts. One, the trade arbitrage is for Group I material to move from the U.S. Gulf to the west coast of India and United Arab Emirates. Secondly, the material will be of Iranian origin, although carrying a U.A.E. certification.

There are multiple Group III exports stemming from Al Ruwais, Sitra and Ras Laffan, with one exceptionally large cargo of 35,000 tons loading out of the Qatar port. This cargo is destined for the west coast of India, presumably for the Bharat Shell system. Other cargoes are noted loading out of Sitra and Al Ruwais, with product moving to the U.S., China and the west coast of India.

Netbacks for the Group III base oils exported from Al Ruwais and Sitra are moved sharply upwards and are assessed at $2,000/t-$2,050/t, for 4, 6 and 8 cSt partly-approved Group III base oils.

Fully-approved grades from Sitra refinery in Bahrain, still marketed at the moment by Neste, will achieve higher netback numbers due to higher selling prices. These grades will netback higher at $2,025/t-$2,075/t for the range of Group III grades.

Netback levels are based on prices derived and informally assessed from regional selling levels, less marketing, handling and estimated freight costs.

There are a number of large Group II cargoes coming into the Middle East Gulf from Far East sources, with two cargoes of a total of around 21,000 tons.  Group II base oils in Middle East Gulf are being resold on an FCA ex-tank and/or on a delivered basis within Middle East Gulf. Levels are re-assessed at $1,525/t-$1,575/t for the light-viscosity grades, with 500N and 600N at $1,615/t-$1,645/t. Group II base oils resold in the Middle East Gulf are sourced from South Korea, Saudi Arabia, Singapore, the U.S. and occasionally from Europe.


South African reports contain news of an exceptionally large loading, which will come out of Rotterdam and Fawley, with around 42,000 tons of various base oils and some chemicals. The base oils on board are expected to be Group l, Group II and Group III. The vessel will discharge firstly in West Africa, into four ports, then proceed to Durban with the mainstay of the cargo and then finally on to Mombasa, where the final part cargo will be discharged. In addition, the Red Sea cargoes will also supply into Durban. Possibly, these cargoes are substituting for the local refinery which is coming out of a turnaround and product may be tight in the South African markets.

As noted above, West African receivers in Dakar, Tema, Conakry and Abidjan will take delivery from the large cargo that is en route to Durban and Mombasa. It is expected that around 12,000 tons of base oils will be discharged in the West African ports. With European refiners unable to supply quantities large enough to move Group I product to Nigeria, sellers have looked at alternative sourcing for these cargoes. One trader bought three cargoes each of around 18,000 tons, the second of which will load out of the U.S. Gulf around mid-March. The first of the parcels arrived into Apapa, and the third may load during April or early May. It is believed that prices were agreed and contracts put in place. Therefore, prices may be more attractive than numbers will currently show, with Nigerian receivers concerned that rising prices will take then out of the Nigerian market.

With supplies from the Baltic under threat of sanctions, there is still one cargo that will load out of Rotterdam and Riga with a total of 10,000 tons of API Group I base oils for Lagos. Western sanctions could scupper supplies from the Baltic, causing mayhem for all concerned.

Until the second large U.S. Gulf cargo arrives into Apapa, it is deemed right to maintain current prices, which are confirmed for the last large parcel discharged into Nigeria. CIF/CFR prices into Apapa are maintained at this time, with indications at $935/t/t-$950/t for quantities of SN150, larger quantities of SN500 offered at $1,050/t/t-$1,065/t, with SN900 priced at $1,125/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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