EMEA Base Oil Price Report


Throughout Europe, the Middle East and Africa, base oil prices have at least steadied, and in some cases have started to weaken, due to a number of reasons. The markets have moved to a more stable situation compared to the hectic scenes that played out over the past few months.

More availability and less demand equals a weaker market where sellers have been keen to move additional barrels as they become available either due to maintained production or because of lower demand. Demand for base oils is declining with the approach of the industry’s traditional holiday season, and finished lubricant demand is also approaching an ebb in its seasonal cycle.

The trend is particularly noticeable in Europe, where demand has dropped in large markets such as Germany, France, Italy and Spain, and the scenario is apparently forecast continue for the rest of 2022. Oddly, finished lubricant demand appears still buoyant in the United Kingdom and Scandinavia, though some think the U.K. is headed for recession. Many U.K. blenders are targeting export markets for finished lubricants in an effort to buffer against declining domestic sales.

The second half of the year could see radical changes in base oil supply and economics with API Group I production being re-established in missing suppliers, such as Eni at Livorno, Italy, and Spanish refiners wading into the market looking for export sales to move material which has become available due to lower domestic demand through the summer months.

Even Group II, which was looking to be moving into a tighter supply scene, has loosened up with more material becoming available from the United States and Asia-Pacific. The hurricane season in the U.S. has been covered from an inventory standpoint, hence material coming out of the refineries has started to look for alternative destinations, Europe being one at the top of the list.

Group III is also showing longer in the European arena, perhaps due to the summer downturn in activity. However, many players have commented that they will start to replenish inventories in a serious way come September, since many blenders had been running on a hand to mouth existence due to the severe restrictions to availabilities for all base oils over the past few months.

It is anticipated that prices will start to relent somewhat, and the markets may see some significant downward moves over the next couple of months. It is true that the ensuing period is not typical and probably is not representative of the true market, however, it is what it is, and only renewed demand in September can perhaps support base oil prices across the Europe, the Middle East and Africa.

The European Union (and U.K.) ban on Russian crude and hydrocarbon derivatives has started to come into effect with only a handful of countries such as Hungary, Czechia, Slovenia and Croatia permitted to take supplies of Urals crude. These landlocked countries’ refineries are served by pipelines, and have no option other than continue using Russian exports at this time. This may change over the next few months, when alternative pipeline operations are investigated. Although base oils form a small part of the total previous EU imports from Russia, there will be effects felt across mainland Europe where Group I and Group II base oils ex Baltic and Black Sea had been supplied in the past.

Due to falling global demand, crude prices have dipped after a sustained period of high numbers. Levels for the marker crudes such as dated Brent, West Texas Intermediate and Murban have all shown signs of moving lower over the past week or so.

Dated Brent for example has moved down to $104 per barrel, some $10 lower than reported in the last issue, now for September front month settlement. Similarly, WTI has also seen a retrenchment bringing this crude to a new level around $101.20/bbl, still for August front month.

European low-sulfur gas oil remains in demand with the vacuum on availability being caused by the restrictions on imports of Russian origin material which played a large part on the European supply scene. This product continues to trade at relatively high levels, unrelated to crude movements, but solely reflecting the supply/demand picture across Europe.

That said, the postings on Monday this week were showing at around $110 per metric ton lower than two weeks ago. Participants in this market have advised that alternatively sourced imports are starting to take up the slack and may prove to be the answer to the Russian embargo imposed throughout the EU and other allied nations. Levels are around $1,179/t, still for July settlement until July 12.

These prices were obtained from London ICE trading late July 12.


European Group I export prices have made a welcome return to the fold with a couple of large parcels out of mainland Europe making their way to Nigeria and the United Arab Emirates. Greater availability has spurred traders into export mode, and this action preceding avails coming out of Livorno after a few months of no production.

It was heard last week that the refinery has restarted fuels production and that the vacuum unit for base oil production will restart imminently, with base oil availability planned towards the end of July, all being well with the restart and quality parameters.

Prices have started to re-emerge with some reports of lower numbers than imagined being applied to the firm export quantities which have so far been concluded. Also current offers for prompt availability out of the Mediterranean and Northwester European sellers appear to be relatively aggressive, suggesting that suppliers want to move material rather than have inventory in tank over the summer months.

Prices have fallen to between $1,420/t and $1,475/t for solvent neutral 150, $1,595/t-$1,655/t for SN500 and $1,695/t-$1,765/t for bright stock, which is once again available. The variation in the ranges is based on the actual quantities of each grade being lifted. 

European Group I domestic markets are moving towards the summer recess, with buying activity slowing. Inventories are being run down, since most around this market are suggesting that with current downward moves in export trades, come September the Group l domestic scene will show lower numbers. Certainly with greater availability and if demand is restrained, the buyers will have more options in purchasing replenishment stocks, However, should heavy buying interest result in higher demand, then this could have a “holding” effect on prices, with perhaps a short term rally for domestic Group I levels.

The differential between prices for sales within Europe and indicative export numbers is increased this week with the reduction in export prices. The differential is currently assessed between €125/t-€240/t.

Having taken a number of steps to becoming shorter in the market Group II base oils appear to have steadied, and whilst there is not an abundance of material available around the market, suggestions of allocations and an extremely short supply scene appear to be unfounded. There are talks of material once again coming in in quantity from U.S. producers, even in spite of the punitive import duty of 3.7% for most of the imports coming from the States.

The one problem which is hitting European prices is the exchange rate which has seen the euro fall to almost parity against the U.S. dollar. The effect of this event is that local selling prices in euros have leapt upwards and will reflect new selling levels from the start of next month. However, given that next month is holiday time, there may be some ‘stay’ before levels are reviewed at the beginning of September. Sellers did not comment on action which may, or may not, be taken.

Prices are lively with few suppliers offering to move levels lower during the July month, however from talk around, levels may start to redress following the summer holidays, and come September there may be welcome relief for many blenders who are facing strong reactions from finished lube buyers who are saying that they cannot accept high prices for these lubricants indefinitely. End users want to see wholesale prices for finished lubricants come down to more realistic levels.

Producers of Group II base oils in Europe and still bearish regarding current prices levels, and have shown little aptitude to adjust prices. There are still reports of ‘special’ discounts being offered to major buyers, perhaps to placate them at this time until the market takes charge in September.

Prices are unchanged since rising at the start of the month. What has changed is the exchange rate between the euro and the U.S. dollar, which, this week has gone to almost parity. Whilst dollar prices remain unchanged (for reference) euro numbers have risen. Prices are now $1,895/t-$1,950/t (€1,890/t-€1,945/t) for 100 neutral, 150N and 220N and $2,095/t-$2,170/t (€2,090/t-€2,165/t) for 600N.

These prices apply to a range of Group II base oils from Europe and the U.S. and possibly to imports from the Middle East.

Group III prices could face the same pressure as Group II as the exchange rate moving to parity.

Demand remains positive with the removal of Russian 4 centiStoke barrels from Eastern and Northern Europe, this grade being in particular short supply. Sellers have commented, saying that it has not been simply the withdrawal of Russian barrels from the 4 cSt market, but the general surge in demand for this grade from existing buyers around Europe. Spanish producers have undertaken to move a large cargo to the West Coast of India in addition to smaller quantities going into France and Turkey. 

The Nordic refinery turnaround in September and October is still in the diary and will start during September.

Prices for partly approved Group III base oils are maintained at €1,955/t-€1,985/t for 6 and 8 cSt oils and at €1,940/t-€1,975/t for 4 cSt, all on an FCA basis ex Amsterdam-Rotterdam-Antwerp and Northwestern Europe.

Fully approved Group III oils are also maintained at €2,035/t-€2,060/t for 4 cSt and €2,100/t-€2,145/t for 6 and 8 cSt.

Baltic and Black Seas

The EU embargo will place a near total ban Russian crude and petroleum products, with all contracts to have been completed prior to Feb. 23 next year. This has already started to affect imports of Russian base oils into mainland Europe, which have predominantly flowed through various terminals in the Baltic. The remaining Lukoil operation in Svetly, Kaliningrad – which does not appear to be affected much by recent events – shipped a number of cargoes already this month, although none of the parcels is bound for Antwerp-Rotterdam-Amsterdam, as would normally have been the case. There is an inquiry to load 10,000 tons out of Kaliningrad for Nigerian receivers in Apapa, while another Baltic cargo of some 9,000 tons loaded out of Riga last week for the same destination. 

All cargoes of Russian export barrels of base oils appear to have ceased from Baltic terminals, with no reports of any material finding its way into Antwerp-Rotterdam-Amsterdam or the east coast of the United Kingdom. There are also no shipping inquiries in the market for vessels to load and discharge into northwest Europe, Scandinavia or the United Kingdom. The movement of base oils through Lithuania does not appear to have been resolved one way or another, with the terminal at Svetly insisting that the said material is not going into EU ports. Therefore, the overland supply into the Kaliningrad enclave by rail should continue unabated.

The position of the EU has not been clarified. Although it was informally suggested that base oils exported to locations other than EU destinations cannot be prevented from happening, the only problem was the transit through a EU country to enable these exports to take place. Watch this space.

The cargo for Nigeria will yield FOB prices eventually, although the marker levels indicated in the last report are considered to be relatively accurate. Hence, they are adjusted in line with European Group I indications, with SN 150 now at $1,375/t-$1,435/t and SN 500 now indicated at $1,525/t-$1,585/t. Indications for SN 900 would be around $1,625/t-$1,665/t.

In the Black Sea region, Russian supplies of base oils out of Azov appear to have dried up. Instead a 6,000-ton parcel was loaded more than one month ago out of Kaliningrad for receivers in Gebze. Additionally, Turkish buyers took material overland from Iran, Uzbekistan and apparently Iraq. These trades are very difficult to pinpoint because all deliveries are made by truck, across borders where no records are disclosed. Reports are that Tupras locally dropped its prices for Group l grades out of Izmir refinery, but the discount was so perfunctory that buyers are not interested to pay inflated prices for this material.

The economic news from Turkey suggests inflation reached astronomical levels, with some agencies postulating rates of higher than 150%. The official line is that levels are around 70% and climbing. Whether the government under Erdogan will attempt to raise interest rates to try to curb inflation is still under debate. Some say that it is now too late to make this move, since it would bankrupt the country, which appears to not be far away anyway.

Apart from the Lukoil cargo, some smaller parcels of Group II and Group III base oils are finding their way into Turkish ports. However, the majority of supplies are coming as mentioned from Iran and other neighboring countries, where payments do not involve the banks, and documentary evidence of supply is minimal.

While no cargoes came out of Mediterranean ports for Turkish receivers in Gebze and Derince, Turkish buyers have made tentative inquiries to look at material coming from Livorno. It may be another few weeks before anything firm is in place, but at least there may be other options for blenders based in Turkey.

Prices for future supplies out of Livorno and Aghio are both expected to be based on the FOB highs of published prices, plus premium, plus freight. This would suggest that CIF levels for SN150 and SN 500 and 600 may now land at around $1,525/t for SN 150, with SN 500 at around $1,675/t CIF Gebze.

Imported Group II grades sold FCA either by traders or by appointed distributors in Turkey remain unchanged, with prices ex-tank 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, remain 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. Another small parcel of around 800 tons has loaded last week with fully-approved Group lll grades for discharge into Gemlik.

Middle East

Red Sea trade acknowledges only one large 17,000-ton cargo out of Yanbu and Jeddah going into the west coast of India and the United Arab Emirates. There are inquiries for other cargoes to move to Egypt, in addition to Mumbai and Hamriyah.

In Middle East Gulf markets there are both exports and imports of Group l cargoes coming in and going out to various locations. On the export side, a parcel of 3,5000 tons loaded out of Hamriyah for Mumbai anchorage. This material will presumably be Iranian SN 500 base oil, which has been bridged through Sharjah.

At the same time a larger cargo of some 8,400 tons of Group l grades loaded out of a Rhone port in southern France for receivers in Hamriyah. This cargo will arrive sometime during August. The load port is interesting because this would be the first base oil cargo to issue from that port, although it is noted that a further cargo may load from the same port during July for Antwerp-Rotterdam-Amsterdam. The origin and title to these parcels is not obvious because this material could be being trans-shipped through the French port.

Another recent first is that a foreign-flagged vessel loaded a large quantity of Iranian Group I base oils and also a small quantity of rubber process oil from one of the southern Iranian ports. The total cargo is around 11,000 tons, with an estimated 10,000 tons of base oils involved. The cargo is to two-port discharge into Mumbai anchorage and also Hazira port.

What is fascinating is the import and export of the same types of base oil. A large European supply is being imported, while at the same time a large export cargo from Iran is leaving the region.

Noted is only one quantity of Group III base oils moving out of Al Ruwais, for receivers in Karachi. Sitra and even Ras Laffan in Qatar appear to be exceptionally quiet regarding exports of Group III base oils.

Netbacks for Group III base oils coming out of Al Ruwais in the U.A.E. are maintained after no further increases have been confirmed from producers. Netbacks are currently assessed at $2,225/t-$2,295/t, for the range of 4 centiStoke, 6 cSt 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 ll base oils FCA U.A.E. supplied from European, U.S, Asia-Pacific and Red Sea producers are traded or resold ex-tank, or on a delivered basis within the Middle East Gulf, with most of the material utilized in the U.A.E. Prices continue to be maintained and are assessed remaining at $1,825/t-$1,865/t for the light vis grades, with 500N and 600N at $1,955/t-$1,995/t. Often these grades are resold in dirhams, benefitting the smaller local blenders who use these grades by the truckload.


In addition to the very large base oil cargo loaded out of Rotterdam and Fawley, South African shipping agents informed of another smaller parcel of some 6,000 tons that will load out of the same two ports but will sail to Durban first and then to Mombasa

The Nigerian market appears to have come alive suddenly with two firm fixtures. Both cargoes completed loading last week – the first coming out of Riga in the Baltic with 10,000 tons of Russian export barrels on board, and the other loading out of Rotterdam with 9,000 tons of Group I material.

There are also another three shipping inquiries in the market for July, these being suspect to reasonably firm. Another 10,000 tons is marked from the Baltic from either Riga or from Kaliningrad, while another inquiry is for a 10,000-ton load from Mumbai and will sail to Lagos. This is an interesting movement, if it takes place, since most Group I base oils go into Mumbai, not exported from that port, but anything is feasible, with the Iranian cargo going to the west coast of India. The final inquiry is for 4,000 tons only, to load out of Hamriyah for Lagos, and with the cargo quantity being smaller and the freight being much higher, this enquiry looks like a long shot.

Once again the Nigerian receivers’ attitude to taking Russian export barrels is questioned, with some players in that region commenting that they would never consider taking Russian base oils at this stage. Other obviously have different views. Shipping could prove to be more difficult than previously, although with the first cargo of 10,000 tons fixed on a well-known owner’s vessel, perhaps there are ways around the process.

Baltic prices are not yet confirmed for the first loading, nor are the Rotterdam levels disclosed. The customs declarations will be coming out in the next few days, but until confirmation of the dale is through, prices will remain as published in the last report.

CIF/CFR levels remain at around $1,695/t-$1,725/t for quantities of SN 150, SN 500 is priced at around $1,750/t-$1,785/t, and SN 900 is at $1,800/t-$1,855/t. Bright stock may have been loaded in the quantity coming out of Rotterdam, in which case numbers will become apparent. However, as an indication, bright stock could be landed at around $1,845/t C&F Apapa.

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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