EMEA Base Oil Price Report


The war in Ukraine rages on, and there are signs that the impacts on base oil markets could ramp up.

Crude oil prices remain near peaks of the conflict, but there are signs that Russian crude and petroleum product exports are coming under severe pressure with sanctions starting to bite on this economic lifeline that Russian has enjoyed until now.

The European Union has presented plans to halt all spot purchases of Russian petroleum derivatives before the end of the year. Contracted deals would be permitted to continue until Feb. 23, 2023 if entered into before June 4 of this year. The only exceptions are for Hungary, Czechia and Bulgaria, which will still be able to access Urals crude delivered by pipeline from Russia, the reasoning being that these countries lack alternative sources.

This will effectively cut off Russian base oil exports through the Baltic and Black seas except for direct sales to receivers in countries not observing sanctions. European traders will not be able to purchase FOB cargoes for sale into areas such as West Africa, the Middle East Gulf and India. Technically Russian traders can still make such sales, but difficulties are envisaged.

Crude oil prices have stabilized but upward pressure continues thanks to rebounding demand from China and also a definitive move by Opec not to increase production.

Dated deliveries of Brent crude have hovered mostly between $124 per barrel and $118/bbl the past two weeks and are now at $120.40/bbl, for August front month settlement.

The crack between Brent and West Texas Intermediate has remained tight, with WTI threatening to rise above Brent thanks to a spike in United States demand. The American benchmark east back to $118.90/bbl, still for July front month.

Low-sulfur gas oil continues to move higher due to strong demand and constrictions on Russian supplies to European markets. Values rose approximately $100 per metric ton the past two weeks to $1,280/t, also for July settlement. These prices were obtained from London ICE trading late June 13.


API Group l base oil exports from Europe remains a vague business, with very few offers for true export sales. There are instances of suppliers sending material to associate or affiliated destinations, but FOB sales for export markets are rare indeed. This is primarily due to Group l base oils being in extremely short supply from European sources, as most output is remaining in domestic markets, where supplies are extremely tight. 

There are signs that the supply situation may improve by August and into the second half of the year, when traditionally demand is slower, and this may give a window of recovery for the European Group I market.

Refiners are under constant pressure to produce optimum quantities of fuels rather than base oils, due to high margins and increasing demand for motor gasoline, jet kerosene and diesel, a large percentage of which was being brought into the European arena from Russian sources. Competition for feedstocks has shortened the Group l base oil supply to the limit.

Some players have commented that base oil margins are at the highest levels in many years and that this should incentivize refiners to produce more. Nevertheless, industry and governments have placed an emphasis on production of fuels rather than lubricants. The good news is that most maintenance turnarounds have either been completed or are wrapping up, so supply may increase.

Export prices are estimated here relative to sales within Europe and only for indication purposes. Solvent neutral 150 is still between $1,525/t and $1,580/t, while SN500 prices is estimated at $1,710/t-$1,795/t and bright stock at $1,895/t-$1,965/t, all on an FOB basis. With availabilities beginning to ease, upward pricing pressure may do likewise.

Prices for sales within Europe appear unchanged since June 1. There has been considerable resistance from blenders across Europe to the recent increases, with many companies drawing down inventories to bare minimums in hopes that prices will ease.

Some operations are trying to reach the start of the holiday season, toward the end of July, before embarking on significant purchasing campaigns. Many have been procuring on a hand-to-mouth basis, purchasing truckloads rather than barge or cargo quantities. Many blenders have said that lubricant end-users are balking at today’s prices and are declaring that contractual quantities will have to be reviewed. This applies not only to Group l oils but to other grades, too. 

The differential between prices on sales within Europe and indicative export numbers remains assessed at €70/t-€155/t, the former being higher.

Group II prices moved up at the beginning of June amid a chorus of discontent from buyers across Europe. Some concessions have been made in certain cases, although information about these “concessions” is hard to come by. It is unclear whether some forms of discounting or volume allowances have been put in place to appease certain buyers. Sellers have been at pains to say that markups applied from June 1 were necessary to cover increased, and increasing, feedstock costs.

There is an air of discontent around the market with Group II prices, and some buyers have cited values in other regions such as the Far East, where availabilities are easier and numbers lower. European market conditions do not reflect the same background, what with a war going on, and suppliers contend that buyers are fortunate to receive material under contract and not to be facing allocations.

Prices are at $1,870/t-$1,925/t (€1,748/t-€1,799/t) for 100 neutral, 150N and 220N and at $2,075/t-$2,145/t (€1,938/t-€2,005/t) for 600N. These values apply to a range of Group II oils from Europe, the U.S. and possibly Middle Eastern sources.

Group III prices have risen significantly over the past two weeks, and one major seller of oils with full slates of finished lubricant approvals is now pushing a large increase thorough to contracted buyers. Some buyers were heard to have given notice of intention to break contractual arrangements because they would be unable to produce salable finished lubricants at those base oil costs.

Blenders throughout Europe anticipated June markups but not of the size advised by the supplier mentioned above, and the market is now in some turmoil. Some blenders have considered altering formulas to use Group II instead, but such adjustments are not easy.

Large parcels of fully approved Group III – cargoes of 15,000-20,000 tons are not uncommon – continue to move to a Rotterdam hub. With prices for the previously mentioned supplier moving up, values for fully approved oil are at €2,035/t-€2,060/t for 4 cSt and €2,100/t-€2,145/t for 6 and 8 cSt.

Prices for Group III oils with partial slates of approvals are unchanged at €1,955/t-€1,985/t for 6 and 8 centiStoke oils and €1,940/t-€1,975/t for 4 cSt, all on an FCA basis ex Amsterdam-Rotterdam-Antwerp and Northwestern Europe.

There were Instances where fully-approved Group III base stocks were competing with partly-approved products, but these new increases put these two sets of products well apart in pricing terms.

Baltic and Black Seas

The announcement last week that EU states will enact a total embargo on all Russian petroleum products from De. 31 this year, and all contracts formed prior to June 4 this year will have to end before Feb. 23, 2023, will have a huge impact on Russian export barrels of base oils coming out from Baltic ports and aimed at European mainland locations. Essentially this could mean the end of a long-standing trade that has existed since the 1980s. It is difficult to see how there will be any way around this ban, affecting all buyers in the EU.

What is not clear yet is whether this embargo will be adopted by United Kingdom and Scandinavian buyers who are not part of the EU. With U.K. politics and current attitudes towards Russia, and Sweden looking to join NATO, the writing may be on the wall for Russian base oil barrels being exported through Baltic ports. Apart from anything else, EU borders in Lithuania and Latvia would be closed to trains delivering material from Russian refineries.

At the moment there is much reduced activity, with only a couple of cargoes identified coming out of Riga. One is primed to go into the west coast of the U.K. with 4,000 tons of two grades of base oils, while the other is part of contracted business into Rotterdam. Both cargoes were due to load at the beginning of June.

The ban on imports will also have limitations on material being moved through Svetly terminal in Kaliningrad, although deep-sea exports theoretically would still be possible. The problem in this instance could be that since Kaliningrad is an enclave and does not share a Russian border, the transportation of base oils to the terminal – other than from Russian ports in the Gulf of Finland such as Vyborg – would be impossible.

Base oils continue to move through some Baltic ports, but in much smaller quantities. Where parcels have been identified, FOB price levels are maintained with an assessment for SN150 at $1,475/t-$1,535/t and SN 500 indicated at $1,675/t-$1,725/t. Indications for any available SN900 would be around $1,765/t-$1,795/t.

The Turkish base oil business appears to be in total tatters, with sporadic Group l availability from Tupras at Izmir refinery, but with any available product at prices which are so high that Turkish blenders cannot afford to buy it. With the unbelievable inflationary spiral at above 50% and the plummeting lira/dollar exchange rate, local prices are too high for any potential buyers in Turkey.

In the Black Sea, Uzbek exports were noted coming out from Batumi port, but these appear to be aimed for Israeli receivers. Russian barrels were still moving from Azov until recently, but with the conflict raging in that region, updated activity is difficult to pinpoint.

Greek imports into Turkey appear to have come to a close, with Greeks opting to supply their own domestic market and also supporting the refinery at Livorno, where base oil production will only restart towards the end of this month after some months of shutdown. Turks are looking at other options, such as supplies from Red Sea sources that were noted previously happening into this market, although it was considered that previously only parcels of Group II base oils were historically sold into the Turkish market. The arbitrage could be open to supply quantities of Group I base oils either out of Yanbu or Jeddah, but whether Turkish receivers can open the letter of credit, etc. may be another matter, given the state of the economy.

Livorno coming back on stream could provide a lifeline to Turkish buyers, although prices for material from this source will not come at low prices. Prices for potential supplies are expected to be formula prices based on the FOB highs of published prices, plus a substantial premium, plus freight. This would effectively mean that CIF levels for SN150 and SN 600 would come in at around $1,755/t for SN 150, with SN 500 at around $1,895/t CIF Gebze.

Imported Group II grades sold FCA are higher, with replenishment costs up from June 1. Prices ex-tank are at €1,925/t-€1,975/t for the three lower vis products, with 600N at €2,050/t-€2,145/t. Group III base oils sold on the same FCA basis, for partly-approved grades, are now priced at €2,135/t-€2,175/t. Fully approved Group III grades from Spain are expected to be around €2,200/t-€2,275/t. Smaller blenders may not be able to afford these new levels, or be able to resell finished lubes with these constituent costs in the Turkish market.

Middle East

Red Sea activity appears to be a little muted now, with only one large cargo of around 19,000 tons moving from Yanbu into Mumbai anchorage during June. Other inquiries are for a smaller parcel to move to Gebze, but it is unclear as whether this is a repeat trade for Group ll base stocks or a cargo of Group I material, which is sorely required in the Turkish market. 

The Middle East Gulf FOB cargo to be loaded out of Hamriyah in Sharjah, U.A.E., appears to have been offered into La Plata, Argentina, rather than the deal to offer this material into Apapa in Nigeria. This material is still reckoned to be of Iranian origin, ad may have been built up through smaller parcels being transported into the United Arab Emirates and stored in Hamriyah until a feasible cargo had been assembled. The quantity now is noted to be around 9,000 tons, larger than the quantity offered into Nigeria.

This could mean that Group I Iranian exports are still flowing in small quantities, since another cargo of some 3,000 tons was offered out of the neighboring emirate, Ras Al Khaimah, to buyers in Sri Lanka. Whether either of these cargoes will eventually fly remains to be seen.

On the other side of the coin Group I cargoes are coming into the U.A.E. from Thai sources in Rayong, these cargoes being in addition to the larger supplies from the Red Sea and from Europe. No U.S. Group I material appears to have been offered into the U.A.E., perhaps with most avails out of that source bound for the west coast of Africa.

Quantities of Group III base stocks are loaded out of Sitra and Al Ruwais, with the largest cargo being one of around 18,000 tons, which is to load both at Sitra in Bahrain and Ras Laffan in Qatar. This Stasco parcel will move to Mumbai for import into the Shell system in that country. The Al Ruwais parcel of around 8,000 tons will sail to discharge into mainland China.

Current netbacks for Group III base oils loading out of Al Ruwais, U.A.E., and Sitra, Bahrain, were increased in the last report, taking into account the higher selling prices for cargoes discharging after June 1. Netbacks are maintained and are currently assessed at $2,225/t-$2,295/t, for 4, 6 and 8 cSt partly-approved Group III base oils.

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

Group II base oils FCA U.A.E. are originally supplied from European, U.S, Asia-Pacific and Red Sea producers. These grades are resold ex-tank, or sometimes on a delivered basis within the Middle East Gulf. These base oils find their way into locations such as Qatar, Kuwait and even Iraq, according to sources in the U.A.E. Other sales are made locally in the U.A.E. to a number of blenders. Prices were reassessed and remain at $1,825/t-$1,865/t for the light vis grades, with 500N and 600N at $1,955/t-$1,995/t.


Breaking news in West Africa – there is a relatively small inquiry for Benin which has not traditionally imported quantities of base oil but has rather taken cross border supplies from traders in Nigeria. This first from suppliers in Greece could mark a new avenue of supply, although the quantity of 3,500-4,000 tons is rather small for the corresponding freight element. Nevertheless, it will be interesting to see if this trade is completed.

There are a couple of Nigerian enquiries that appear to have been diverted away from sourcing in the Baltic to loading out of Rotterdam. This is not to say that some of the material is not of Russian origin, just that Rotterdam will be the nominated load port. One of the cargoes could also be to cover requirements in Guinea and Ghana, while the other will be for distributors in Apapa.

With the cargo out of Hamriyah in the U.A.E. offered elsewhere, traders are looking for any and all alternative supplies for Group l base oils to go into Nigeria. Another large cargo from the U.S. is underway and will be reported soon.

CIF/CFR prices were updated following the U.S. cargo and remain as per last report. No new cargoes were notified as yet, and as for when numbers will be updated.

Levels are around $1,695/t-$1,725/t for quantities of SN150, SN500 priced at around $1,750/t-$1,785/t, and SN900 is at $1,800/t-$1,855/t.

Prices are being sought for the lower specification bright stock that was discharged into Apapa a couple of weeks back.

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.

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.

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