EMEA Base Oil Price Report


The knock-on effects of inflation and rising interest rates are constraining manufacturing and services industries to the extent of denting demand for commercial items such as finished lubricants – and this in a season when trade would normally be buzzing.

Instead, the lubricant market is in the doldrums, and the base oil business is dull and only getting by on a day-to-day basis.

In Europe, API Group I base oils are in relatively short supply, but with no active export sales, quantities are sufficient to cover regional requirements – which of course have been hurt by the downturn in economic activity.

Forecasts call for further contraction in European base oil markets through the third quarter of this year and no uptick expected until well into 2024. The Group I price premium to diesel is at its highest level since the middle of last year, so there are incentives for refiners to produce more Group I, but lack of demand is holding them back.

Group II prices in Europe are being shielded from pressure by lower-than-normal of imports from the United States, which leads to a balance between supply and demand. Other areas, such as parts of the Middle East Gulf region, appear more buoyant but still lack the impetus that this time of year normally brings. Group II sales are rising in Middle East Gulf markets and look likely to continue for at least a couple years, even though Group I remains the number one category of base oil in this region.  

The Group II premium to diesel is also at a high point, although lower than for Group l. Again, this would normally incentivize producers to convert more feedstock into base oils, but supply and demand are balanced here, too, and refiners do not want to upset that.

Group III markets quickly developed oversupplies, which some players blame on poor demand, whilst others cite the entrance of new suppliers from Asia-Pacific.

The war in Ukraine continues to erode confidence for many, and with no end to the conflict in sight, the situation could continue to sap business momentum around Europe and beyond.

Crude oil prices rose in the past week, returning to levels of some weeks ago. Dated deliveries of Brent crude climbed more than $4 per barrel to $76.60 per barrel, for August front month settlement. West Texas Intermediate followed suit to reach $71.50 per barrel, now also moving to August front month.

Low-sulfur gas oil prices soared in recent days by around $50 per metric ton to $734/t, now for July front month. Demand for diesel fuel is high because of summer vacation travel. All of these prices were gathered from London ICE trading late June 19.


The European Group I export market has been missing for several weeks. Even shipments that are transfers between affiliates of the same oil major – not true exports – are slowing.  The facts are that there are few producers around Europe that could put together sufficient quantities to promote export trades. Hence traders still active in export destinations are canvassing alternative sources such as the United States.

Most European producers are concentrating on local markets, where demand is taking up available quantities but not taxing supply. Multiple market sources estimates last week that the Group I market in Europe has contracted around 22% from the same period last year. This takes account the absence of Russian exports, which the European Union, the United Kingdom and Sweden have banned since February. It also takes into account Group I imports from sources in the Red Sea and the U.S.

Prices for Group I exports from Europe are purely notional and given here for comparative purposes only. Values are unchanged this week at between $1,020/t and $1,055/t for solvent neutral 150, $1,085/t-$1,140/t for SN500 and SN600 and $1,295/t-$1,345/t for bright stock, all on an FOB basis.

Prices for Group I sales within the region are also materially unchanged since the beginning of June. Negotiations are due toward the end of June. Many blenders see July as their last “busy” month before the holiday period. The news is that most blending operations are not running full out now since demand for finished lubes is curtailed.

Some industry sources do expect demand to pick up a bit in July, when some blenders may take the opportunity to rebuild depleted inventories. High interest rates have heightened attention to cash flow and prodded many blenders to avoid encumbering finances on large base oil purchases.

Price indications are still put at €1,020/t-€1,050/t for SN150, €1,125/t-€1,155/t for SN500 and around €1,355/t for bright stock. There does appear to be some downward pressure on these values.

The euro’s exchange rate with the U.S. dollar rose the past week to $1.09136, but the price differential between Group I exports and sales within the region is at €95/t-€145/t, exports being lower.

Group II prices appear to have found levels where suppliers can protect market share while still earning adequate returns. There is talk of downward pressure, but suppliers have so far parried them. Demand has not risen like suppliers would have wished, but forward orders for July appear relatively healthy, and the market is balanced.

With Group II prices much lower than Group III levels, many lube manufacturers are considering combining polyalphaolefins with Group II as a blended base stock, instead of using more expensive Group III grades. Additive suppliers have been working closely with many blenders to achieve overall cost savings, which are vital in the market today.

Group II prices are unchanged at €960/t-€1,125/t ($1,030/t-$1,205/t) for 100 neutral, 150N and 220N and at €1,295/t-€1,360/t ($1,421/t-$1,492/t) for 600N. Within the former range, 100N and 150N are typically priced higher than 220N. These prices apply to a large range of Group II oils from European, U.S., Asia-Pacific and Red Sea sources, imported in bulk and in flexi-tanks.

Group III levels are under pressure from lower priced imports from new Asia-Pacific sources. The large differential between Group II and Group III prices is also weighing in. Grades without full slates of finished lubricant approvals are feeling the pressure more than those that do have full approvals – currently just oils from the SK Enmove-Repsol joint venture in Cartagena, Spain.

Availabilities are excellent, and suppliers are actively encouraging buyers to take all of their contracted allotment of fully-approved oils and even more if they can.

The situation involving two parties competing in Europe with base oils from the same Malaysian source appears to have been clarified. There are no doubts regarding the specification of material being sold by the trader. Sources have confirmed that the product is Group III and meets characteristics of the Malaysian producer.

Buyers are looking to take further quantities of gas-to-liquids Group III+ base oils. Prices for these grades are competitive and are indicated at €1,755/t-€1,795/t, on a CIF basis, depending upon which Mediterranean port the quantities are delivered to.

Prices come up for review again for July and may face some downward pressure since distributors are offering incentives for sales of material over and above contracted monthly amounts. Discounts of €25/t-€45/t are being offered for material taken out of tank before the end of the month, and those lower prices will be applied to material contracted for July.

Prices for Group III oils without partial slates of approvals or no approvals are assessed in a wide range of €1,645/t-€1,735/t for 4 and 6 centiStoke oils and at €1,675/t-€1,715/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam or Northwestern Europe. Group III oils from Cartagena, which hold Volkswagen’s VW 504/507 approval have been offered at €1,985/t-€2,010/t for 4 and 6 cSt. Small amounts of fully approved 8 cSt are priced at €1,940/t. All of these prices are on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain.

Baltic and Black Seas

Baltic trading was reversed, with more quantities of base oils moving into the European Union Baltic states. Previously, blending operations would have used Russian products, and they have now turned to taking various base oils from supply points in Europe and in one case from the United States. Lithuanian blenders have also been using rerefined base oils from Kalundborg on a regular basis.

Lukoil continue to try to move base oils through the terminal at Svetly in Kaliningrad. Because of the position of this facility, the logistics and economics of moving material from this base to regions such as Turkey and the Middle East Gulf is particularly difficult, with freight rates and a dearth of vessels to charter being only a couple of the negatives in conducting trade from this base.

The plant at Svetly continues to take material that is railed into Kaliningrad through Lithuania. Each 3,000-ton train has railcars sealed, which can only be discharged on entering Kaliningrad.

With a number of Russian refineries having completed maintenance and now coming back on stream, the Russian domestic markets have become vital outlets for base oils. European imports accounted for around 200,000 tons of Russian exports, prior to the EU’s ban on Russian imports. These quantities of material are having to find new destinations to absorb base oil production from Russian refineries. To date, this exercise has been easier said than dome, with only Turkey taking vast quantities of Russian base oils. Some of that loaded out of Svetly terminal and shipped in lots of 5,000-10,000 tons to Gebze port.

United Arab Emirates receivers have also elected to take Russian cargoes, but these mainly emanate from Volgograd refinery in the south. They use Limas terminal as a staging post to transfer the cargo from river ships, which ply the Volga and Black Sea routes, to sea-going vessels which load out of Limas terminal.

Lotos/PK Orlen in Gdansk refinery may have availabilities of some grades next month but still not confirmed. Material still leaves Gdansk, supplying Italian buyers by truck who are presently unable to lift material from Livorno refinery because of the stoppage at that refinery. The latest news from Eni is that start-up might be in October, but there is talk of a possibility that base oil production at this refinery may not restart.

FOB prices from Svetly are estimated by taking CIF prices for product landed into Gebze, less freight costs. As a “guesstimate” only, SN 150 levels are taken to be around $785/t-$825/t, with SN 500 somewhere at $795/t-$840/t. Selling prices vary from one destination to another, and these numbers may not be accurate or representative of FOB levels. Prices are given on a “best indication” basis only.

FOB prices for Group I base stocks from Gdansk refinery in July will be in line European mainstream pricing, but with no export market at this time and prices more than a month away, best estimates on an FOB basis are that SN 150 may be priced at $1,020/t-$1,055/t, with SN 500 at $1,085/t-$1,140/t. Bright stock, if available, will perhaps be somewhere at $1,295/t-$1,345/t.

Turkey is taking large quantities of Russian SN 150 and SN 500 and is becoming ever more dependent of supplies from Russian refineries. With Livorno out of action and Motor Oil Hellas in Aghio short of Group I base stocks, the options for taking supplies of Group I base oil from Mediterranean sources are severely limited. A major has offered material from Sicily, but the prices are working out at around $250/t higher than Russian supplied barrels.

The sale tender from Sonatrach in Algeria has been accepted by Turkish buyers during last week. The quantities of 3,000 tons of SN 500, 2,500 tons of SN 150 and 500 tons of bright stock 150 are expected to be delivered before the end of June. Final prices were heard at SN 150, $875/t, and SN 500 at $995/t CIF Gebze. No price for bright stock was reported.

The Baltic cargo of around 10,000 tons is still planned to load out of Svetly on a prompt basis, but again no vessel fixture appears to be confirmed. This cargo was scheduled to load around June 15, but with no suitable tonnage to charter to lift this parcel, it may be some time before a vessel is available in the region. It is not known, but Svetly terminal could have containment issues, with ullage in shore-tanks taken up with stocks that have arrived into the terminal, and which have not subsequently been loaded out. There is no information flow to establish the current situation.

A major offered a cargo out of either Augusta in Sicily or Valencia. Prices were heard at SN 150 at $1,050/t, with SN 500 at $1,120/t basis CIF Gebze, but these levels are much higher than both the Algerian tender, and also Russian supplies, which are significantly less.

Group I base oils from Tupras from Izmir refinery have the advantage of being priced in Turkish lira, and with the exchange rate worsening against the U.S. dollar almost daily, prices in local currency may be more attractive to blenders in Turkey. The only problem is the quantities of material available, which can be unpredictable. Selling prices with numbers given in Turkish lira are as follows: spindle at Tl 20,725/t ($1,057/t), SN 150 at Tl 17,269/t ($881/t), SN 500 at Tl 19,999/t ($1,020/t) and bright stock at Tl 24,767/t ($1,263/t). Prices are for ex-rack truck sales.

Group II ex-tank prices remain unchanged this week with levels at €1,175/t-€1,220/t for the three lower vis products, (100N, 150N and 220N) with 600N at €1,345-€1,425 pmt. Supplies of Group II grades are sourced from the Red Sea, the United States, South Korea and Rotterdam or hub storage in Valencia.

Partly-approved Group III base oils sold by appointed distributors on an FCA basis, or on a truck-delivered basis, are taken slightly lower, and are now assessed at €1,765/t-€1,800/t FCA. Fully-approved Group III grades delivered into Gemlik from Cartagena refinery remain priced at €2,200/t-€2,250/t FCA. Another small cargo of 1,200 tons will load out of Cartagena this week for Gemlik port. 

Middle East

Red Sea shipping reports show large cargoes loading out of Yanbu and Jeddah for the west coast of India and the United Arab Emirates. Yanbu refinery appears to have recovered from the downtime incurred when there was a recent problem at the refinery. One cargo of 17,000 tons will load for receivers in India in Mumbai anchorage, while a second cargo will discharge in four U.A.E. ports – Fujairah, Ras al Khaimah, Hamriyah and Jebel Ali. A smaller cargo of 3,000 tons will load out of Yanbu for Egyptian receivers.

In the Middle East Gulf region, Group II cargoes are noted arriving into the U.A.E. ports of Hanriyah and Jebel Ali and are being sourced from a number of locations, such as South Korea, the United States and Europe, in addition to a number of cargoes coming from Yanbu. Luberef from Yanbu are possibly the most prolific supplier of Group II base oils that are moving into the U.A.E., with additional barrels also being made available from Al Ruwais refinery, although most of this production is use internally for in-house blending by Adnoc.

With a regular update on base oil consumption in the U.A.E., there are definite trends to move away from a high dependency on Group I base stocks to Group II and Group III. These moves are progressive and reflect the vehicles and industrial units, which have evolved from older traditional factories to modern processes requiring higher spec lubricants and greases. Vehicles, which in years gone by were secondhand imports, are now state-of-the-art modern cars and trucks that also require advanced lubricants, which are being blended locally and which have to meet international standards.

Thus, there is a general move to Group II becoming the predominant type of base oil in the U.A.E. and other parts of the Middle East Gulf region. Iranian Group I base oils are still moving into the U.A.E. in smaller quantities, and are being stored in Hamriyah and Ras Al Khaimah ports for local blending operations.

Cargoes of Group l material also arrive into UAE from sources in Thailand, Singapore and Indonesia. Other supplies of Group l base oils are coming in from Indian refiners out of Haldia and Chennai, where low cost Russian crude imports with prices at around $40 per bbl. allows IOC and HPC to produce large quantities of Group l base oils which are now exported, being surplus to local requirements. Quantities of various sized cargoes are being sold to buyers in UAE and Pakistan.

Russian cargoes are still on the table, with Lukoil trying to send more cargoes loading from Limas terminal in Turkey, for receivers in Hamriyah. The parcel sizes are not defined and will depend on available vessels which, due to restrictions on chartering, can be difficult to find. About 10,000 tons in total will be the cargo size, perhaps split into two parcels depending on available vessels. Lukoil will continue to maintain the U.A.E. as an outlet for export barrels from both Perm and Volgograd refineries.

Middle East Gulf Group III exports note cargoes loading from Bapco from Sitra refinery in Bahrain in addition to other parcels loading out of Al Ruwais in Abu Dhabi. A large cargo of around 25,000 tons will load out of Qatar for Shell. This cargo will be bound for Far East and will discharge into the Shell system for internal use. However, some of this cargo may be resold on direct basis to traders, who will have the opportunity to offer the Group III+ material to buyers and receivers in Europe and elsewhere.

Adnoc will load a cargo from Al Ruwais for Nantong during June, while another replenishment cargo for the European market will load in July, with around 7,000 tons for discharging into Dordrecht.

Netbacks for partly-approved base oils loading out of Al Ruwais and non-approved Group III base oils loading from Sitra refinery are reviewed and are taken lower this week, with selling prices heard from India and Europe having been trimmed, leading to lower netbacks. Netback returns are currently assessed at $1,655/t-$1,710/t, for 4 centiStoke, 6 cSt and 8 cSt partly-approved and non-approved Group III base oils.

Netback levels are derived from regional selling prices, less marketing, margins, handling and estimated freight costs.

Group II base oils resold by distributors and traders on an FCA basis in the U.A.E. are sourced from European, U.S., Asia-Pacific and Red Sea producers. Grades are sold ex-tank U.A.E. or on a truck-delivered basis within the U.A.E. and Oman.

Prices remain unaltered, with levels in the U.A.E. at $1,520/t-$1,465/t for the light vis grades, with 600N at $1,570/t-$1,565/t. The high ends of the ranges refer to road tank wagon deliveries in the U.A.E. and Oman.


South African shipping agency sources noted that the vessel loaded with a large base oil cargo of around 23,000 tons completed loading in Rotterdam and Fawley and is on the high seas en route to Durban. The cargo will initially discharge in Durban, Mombasa in Kenya, and the final port – Dar-es-Salaam in Tanzania.

The rainy season is well and truly affecting operations and logistics in West Africa. Heavy downpours have held up business in places like Lagos, preventing base oils being loaded on to trucks and delivered to blenders around Nigeria. Flooding is common, with little infrastructure to cope with excess water. Markets have slowed, with transportation inland by truck becoming problematic, with roads flooding and being washed away. Demand for buying base oils has dropped, with normal activities becoming reduced during the rainy season.

The base oil market is still experiencing huge problems getting access to dollars to enable local banks to open letters of credit. The recent election has been disastrous for banks and government agencies, and with the Nigerian government in a mess, with legal proceedings from the opposition party openly proceeding against the new president in the courts.

The tales of some traders’ experiences is unbelievable – for example, having to accept part-payment for cargoes in unconfirmed letters of credit, local naira and dollars in cash. Naira is exchanged using the “parallel” market (black market), which has very different rates of exchange from the National Bank.

Prices for a recent cargo had CFR levels at $1,020/t for SN 150, SN 500 at $1,070/t and SN 900 at $1,150/t.

New offers for future into July or August loading may be slightly lower prices due to trader competition. CFR prices may be in the ranges of SN 150 at around $1,075/t-$1,095/t, SN 500 at $1,145/t-$1,175/t and SN 900 at $1,220/t-$1,245/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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