Amid national mourning for the late Iranian Supreme Leader Ayatollah Ali Khamenei, delegations from Tehran and the United States agreed to resume talks in Qatar.
Well into the 60-day ceasefire period allocated for the sides to hammer out details for a lasting settlement, what has been decided has at best been hazy and at worst has not been accepted or decided at all.
The Strait of Hormuz remains somewhat of a thorn in negotiations, with both sides making statements. Washigton insists it is open to all marine traffic whilst Iran’s Islamic Revolutionary Guard Corps maintains that all vessels must register with Iranian authorities prior to attempting the transit.
Iran is aware that Hormuz is its “ace in the pack,” and the card can be played at any time, bringing trade through the strait to a halt. Obvious resistance is being brought to bear by U.S. negotiators.
There have been reports of some vessels sticking close to the Omani controlled part of the waterway and successfully passing through Hormuz, apparently both directions. These vessels are being escorted by U.S. naval ships to ensure safe passage.
Other news from the region is that Gulf states may start talks directly with Iran, omitting the U.S. from negotiations that may involve the United Arab Emirates, Saudi Arabia, Qatar, Bahrain and Kuwait. Presumably discussions would be centered around Hormuz and the free passage of all vessels. More details on these proposals have not been circulated or announced publicly as yet, hence the world awaits to see what developments are forthcoming.
As always, it is also worth noting the war between Ukraine and Russia. Reports over the weekend indicate a spate of Russian attacks on civilian targets, with blocks of flats being hit, and with a number of deaths and many casualties. In retaiiation, Ukraine has reported drone attacks on a large refinery in St. Petersburg causing substantial and perhaps long-term damage. This refinery does not produce base oils but does account for substantial quantities of fuels feeding the densely populated regions of northwestern Russia.
A major naval base was also hit in the St. Petersburg vicinity. The base is the home and main service port for the Russian Black Sea fleet.
Reports of fuel rationing in some areas around Russia are rife, and with Ukraine bringing the war to the stark attention of ordinary Russians, economic and political pressures against the war may start to build from within.
Other refineries have been subjected to drone attacks throughout, and across the Russian mainland, but the main spearhead of attacks from Ukraine during the past few days has been into Crimea, pitching the promontory into darkness with no power.
Given the background to the two conflicts, base oil prices remain at relatively high premiums to distillate, particularly gas oil, which appears to have steadied and is stable in the $900s per metric ton.
Pressure across the European, Middle Eastern and African regions is mounting however, on the recent high prices established over the past three months for API Group I and Group II base oils. Erosion on prices is happening for these base oils, but strangely not on a dramatic basis, but rather a steady drip, as good or adequate availability for these base oils is maintained across the regions, apart from Middle East Gulf.
Group III prices are a radically different story particularly in Europe, where a large market had been emerging over the last ten years, but with the lack of replenishment cargoes from Gulf suppliers, the Group III markets may be facing shortages and with tightening of supply chains comes high prices.
Group III base oils have not been subjected to prices pressure, with levels remaining high for the available barrels in the European arena. Other regions such as U.S. and Asia-Pacific are also being negatively affected, but those regions appear to be able to adapt to the shortages more efficiently than Europe. Gas oil prices are rising, possibly due to the driving season being at a peak and Europe still struggling to cover demand for distillate fuels.
Crude and Gas Oil Prices
Crude prices have stabilised around current levels, and with few dramatic announcements from U.S. or Iran, appear to be on course to maintain current values.
Economists from J.P. Morgan and Goldman Sachs have predicted crude prices to soften from now until the end of this year, with levels of $71 per barrel average being called for the remainder of this year.
Dated deliveries of Brent crude: $71.90/bbl, September front month
West Texas Intermediate: $69.45/bbl, August front month
European low-sulfur gas oil: $970/t, July front month
Prices were obtained from London ICE trading late Monday July 6.
Europe
Group I base oil availabilities are reported as ‘adequate’ for all regions around Europe, with the supply blips having been ironed out, where certain producers switched entirely to fuel production using vacuum gas oil feedstock, and for a space of a few weeks produced no Group I base stocks.
These pockets are now back supplying local markets, with one supplier offering surplus material for FOB sale, perhaps to buyers in Scandinavia or the United Kingdom.
Demand is weaker with buyers of Group I base stocks holding back, seeing the writing on the wall that says prices are going to fall across the summer period, when typically demand almost disappears until September.
Many blenders contacted last week confirmed that with buying small quantities to maintain finished lubricant production, they could wait until September before replenishing inventories, when, as they emphasise, prices will be lower than current numbers, they assume.
Finished lubricant demand has taken a hit from rising prices of base oils and additives which have necessarily been passed on to prices. Retail markets are waiting to see the reverse of the price hikes which were imposed over the last four months.
Export sales still remain elusive with the European Group I market returning to imports which are now being offered FCA from cargoes recently arrived from Yanbu.
A major continues to send large cargoes to affiliated companies in Singapore and South Africa, and to regularly to contracted buyers in West Africa. These relatively large cargoes have been described as European exports in other base oil reports, although the practise is really about rebalancing global hubs.
Prices are softer particularly at the high ends of the ranges, but ranges remain wider than normal with various sellers adopting different selling tactics when offering prices.
Group I
European exports, basis FOB
No current market
Northwestern Europe, FCA Antwerp-Rotterdam-Amsterdam
SN150: $1,825/t-$1,920/t
SN500: $1,875/t-$1,965/t
Bright stock 150: $2,150/t-$2,395/t
Eastern Europe, FCA
SN150: $1,955/t-$2,025/t
SN500: $2,100/t-$2,225/t
Bright stock 150: $2,355/t-$2,415/t
Mediterranean prices, FCA Spain, Greece, Italy
SN150: $1,960/t
SN600/500: $2,075/t
Bright stock: Only very small quantities available. Prices on demand
Pan-European, FOB/FCA
SN150: €1,600/t-€1,695/t
SN500/600: €1,735/t-€1,900/t
Bright stock 150: €2,175/t-€2,275/t
Pan-European prices are assessed on an aggregate basis using prices from Scandinavia, Poland, France, Germany, Benelux, Spain, Italy, Greece, U.K., and Baltic States.
The euro’s exchange rate with the U.S. dollar was $1.14141 Monday.
European Group II base oil prices are steady rather than ‘stable’ with only gathering price pressures building for change. Major suppliers still maintain their ‘posted’ price levels, but discounts and TVAs are being included on almost all offers for July, with suppliers trying to move as much material as possible, before the start of August when essentially the markets will close down for a month.
With crude and feedstock prices steady, it is still expected that the ‘postings’ may be changed during the week, with suppliers lowering prices.
Demand remains intact, but with adequate stocks in tank, buyers are extremely reluctant to purchase large quantities of Group II base oils. Some buyers are being forced to purchase larger quantities than ideal if delivery is by barge, but some buyers are opting to take smaller truck deliveries rather than tie up capital in large inventories.
Rhine and Mosel water levels have fallen rapidly during the latest heatwave across Europe, with all European waterways announcing draft restrictions.
Buyers are insiating that prices should be brought into line with an acceptable premium over diesel. The average premium for all Group II grades prior to the Iran war was around $450/t-$500/t, whilst currently the average premium over diesel is around $1,800/t.
‘Posted price’ levels seen during last week are at around $2,575/t in respect of the 150N grade, with 600N at $2,630/t, on the basis of FCA sales Antwerp-Rotterdam-Amsterdam.
Supplies of Group II base oils continue to be imported from Saudi Arabia with cargoes arriving from Yanbu. The European market still maintains higher prices than alternative markets such as India and South Africa.
Prices are moved lower, with levels heard at around €2,285/t-€2,365/t in respect of the 100N and 150N grades, with 600N between €2,395/t-€2,470/t.
Group II, FCA basis.
110N: €2,325/t-€2,400/t
150N: €2,325- €2,410/t
220N: €2,295/t-€2,370/t
600N: €2,410/t-€2,500/t
These prices apply to a wide range of Group II base oils that may be sourced from within Europe or imported from the U.S., the Red Sea and Asia-Pacific.
If the Strait of Hormuz were pronounced completely open today, there would be no chance to moving any Group III cargoes from Al Ruwais, the only facility in the Gulf undamaged. The current situation remains too volatile for traders and vessel owners to engage in any movements from the Middle East Gulf.
No Group III base oils will be arriving into Europe from Sitra in Bahrain or from Ras Laffan in Qatar, due to damage to facilities. There was been a massive explosion at Ras Laffan, ten days ago damaging the liquefied natural gas loading facility. Apparently reports are that one of the base oil trains producing gas-to-liquids Group III+ grades is available and in functioning, but availability of LNG and the loading facilities at the terminal remain doubtful.
The negative economics of war risk insurance premiums, and the logistical nightmare of finding suitable tonnage to load and sail cargoes to Asia-Pacific, the U.S. and Europe is beyond the Pearl operation at Ras Laffan right now.
European buyers are vainly searching for alternative sources of Group III base oils, but established suppliers who are maintaining stocks of Group III base oils have their own customers.
Fully-approved Group III cargoes continue to load from Cartagena in Spain, but quantities allocated to the European market do not go near to covering the shortfall caused by lack of supplies from Middle East Gulf.
Prices for Group III oils with partial slates of finished lubricant approvals are unchanged this week on the basis of diminishing or diminished availabilities. There are no spot availabilities.
Group III
Partly approved oils, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe
4 cSt: €3,395/t-€3,425/t
6 cSt: €3,395/t-€3,430/t
8 cSt: €3,250/t-€3,295/t
Fully approved, FCA Antwerp-Rotterdam-Amsterdam, Spain
4 cSt: €3,395/t-€3,445/t
6 cSt: €3,380/t-€3,420/t
8 cSt: €3,425/t-€3,460/t
All the above products sold on a delivered basis will be subject to transportation charges, added to the prices above.
Rerefined Group III prices are also unchanged. Sellers continue to hold back from offering extra quantities of these grades, with buyers receiving allocations based on historical purchases.
Rerefined Group III, FCA Germany
4 cSt: €3,120/t
5 cSt: €3,125/t
6 cSt: €3,125/t
Baltic and Blacks Seas
Russian domestic base oil prices continue to move higher, with less availability from a number of refineries which have been targeted and hit by Ukrainian drones.
Drone strikes on refineries deep within Russia are being ratcheted up by Kyiv with news that production of base oils along with fuels has been severely disrupted, with rationing and shortages reported in a number of regions.
Lukoil, Rosneft and Bashneft production will have been affected with strikes at Volgograd, Novokuybyshevsk and Ufa refineries.
There are no reported Russian base oil exports loading or leaving Baltic ports, whether in bulk or in flexies and following Ukrainian strikes on facilities in St Petersburg refinery and terminal there may be damage to shore storage.
Rumours heard around the market were suggesting that trains taking base oils and other petroleum products from refineries to shore terminals were being targeted by Ukrainian drones.
The cargo loaded out of Ulsan, South Korea, for receivers in Turkey is on the high seas and this cargo will comprise of Group II base oils and is believed to have been purchased from GS Caltex.
It is not known how this operation is controlled, whether the cargo is delivered on a CIF basis from the sellers, or if buyers in Turkey assume the role of charterers and purchased the cargo on an FOB basis. GS Caltex have chartered vessels previously for material moving into Turkey and Antwerp-Rotterdam-Amsterdam.
The vessel may transit the Red Sea and Suez, otherwise it will be an inordinately long voyage time for the cargo to sail around the Cape and then through the Mediterranean. All depends on the vessel’s rotation and voyage instructions for other ports, since it is believed that the vessel is large chemical parcel carrier, and will have other cargo lots on board.
Group I base oils into Turkey from Iran are currently halted due to the war, with no Russian base oils available for import. This is causing problems for Turkish blenders, who are constantly looking for sources for low cost Group I base oils.
Re-refined base oils from Greece and Egypt are being purchased in flexies and are moving into Turkish ports such as Gebze, Turkey,, Aliaga and Derince.
Blenders in Turkey are also looking to Azeri and Uzbek sources, but logistics are difficult and expensive from Azerbaijan and the full range of Group I grades is not available, with heavier solvent neutrals missing from the Uzbek slate.
Black Sea trade includes base oils going into Ukraine, with Eastern European refiners selling material into this market, but at the same time a source has confirmed that Russian base oils are still being used by some Ukrainian blenders, along with supplies from Naftan in Belarus.
Turkish blenders also purchase Group I base oils from AMOC and APC in Alexandria. Buyers are also looking to Algeria to see if they can source barrels from Sonatrach. It Is not known if this would be Algerian produced material or whether supplies may be considered from Augusta in Sicily.
The Augusta product has REACH accreditation, whilst material produced in Algeria does not.
Group I, ex rack Izmir refinery
Spindle oil: Tl 77,857.00/t plus, VAT Tl 18,511.30/t
SN150: Tl 76,676.00/t plus, VAT Tl 17,364.50/t
SN500: Tl 78,411.00/t plus, VAT Tl 17,711.50/t
Bright stock: Tl 94,765.00/t, plus VAT Tl 20,982.30/t
Sales incur a standard loading charge of Tl 10,146.50/t and should be added to the prices above.
Traders in Turkey have advised no sale offers will be forthcoming for Group II.
A large blender in Turkey accounted for around 9,000 tons of finished lubricants imported into Ukraine during 2025. These lubes were for automotive and Industrial end-use.
This report has been trying to investigate what is happening in the Group III sector within Turkey, since with no Russian supplies, and no reported imports from AsiaPac, and the dearth of imports from Middle East Gulf, Turkey would appear to be without any supplies of Group III base stocks.
Group III
Partly approved
Tatneft 4 cSt, FCA: no stocks
Fully approved
From Cartagena, Spain: No longer entering the Turkish market through Gemlik
Middle East
Yanbu cargoes loaded during May have been arriving in Antwerp-Rotterdam-Amsterdam, with one cargo loaded around mid May and a further two parcels loaded end May which are giving ETAs of later this week and second week of July. The size of these cargoes in unknown, but the three cargoes may have been Group I base oils.
A cargo of Group II base oils has loaded for discharge in Durban.
Smaller Group I cargoes are in planning for Port Sudan, Mombasa, Alexandria and Aqaba. these may be loaded out of both Yanbu and Jeddah.
The Lebanon situation is no clearer with the press identifying a crack special forces unit within Lebanon, belonging to Hezbollah. This unit is greatly feared by any enemy of Hezbollah.
Tehran still sits on the fence, unable, or unwilling, to intercede with Hezbollah to defuse the situation with their proxy. The 60-day ceasefire between Iran and U.S. continues but with varied comments from Iran it becomes very difficult to gauge to reality of a move the a peace solution. Iran have made a number of demands on U.S. which have been rejected, and similarly, U.S. requests haven met with derision by Tehran.
Comments have been received by this report that the stage may become clearer following the funeral arrangements for the late Ayatollah.
The pearl in negotiations hinges around the Strait of Hormuz opening for all merchant marine vessels transiting the channel. There are obstacles appearing on every horizon since even if cargoes lying at anchorage are finally discharged into shore storage, assessing prices to be set on these supplies remains vague, with some companies stating that they will be required to pay demurrage to vessel owners prior to cargoes being discharged.
Supplies of Group II base oils which were in storage in the UAE are long gone, with FCA prices suspended until replenishment cargoes can be discharged. Small quantities in trucks are coming in to a limited number of blenders, arriving from Fujairah. Quantities are not resold, and are used in blending to produce small quantities of finished lubricants for local markets, including contracts for the UAE military and civil government.
Reporting here of Group II prices is for now suspended.
Group III base oils, FCA Hamriyah/Sharjah port, or delivered by RTW in the UAE and Oman, are available from Adnoc at Al Ruwais. Quantities are not large, but further difficulties are in finding any other base oils to use in blends with Group III, and also accessing supplies of additives required to meet formulations. Demand is slow with prices unconfirmed and therefore reporting here is suspended.
The distributor handling Group III base oils in Sharjah, has commented that they “are not really sure why they are open for business” since trade is slow and often pointless.
Netbacks for Group III base oils ex Al Ruwais, Sitra and Ras Laffan are suspended for the time being.
Africa
A cargo of Group II base oils arrived into Mohammedia in Morocco under the auspices of a U.S. major delivering Group II base oils into a distributor.
A cargo around 3,000 tons of bright stock was delivered into Alexandria under the EGPC contract. The cargo loaded out of Yanbu.
A Sonatrach cargo loaded out of Augusta and will discharge in Algeirs.
Another U.S. Gulf Coast cargo it noted to be loading prompt for receivers in Durban. A large composite base oil cargo loaded out of Rotterdam and Fawley, supplying distributors and affiliated companies in South Africa. The vessel will discharge in Durban during the second half of July.
The supply to Ghana, Guinea and Cote d’Ivoire has been completed.
This particular cargo is continually mis-reported, with another base oil publication indicating that the cargo was for Nigeria. This is not the case, since part of the cargo forms part of the supply commitments under the Ghana tender.
No new activity in Nigeria, apart from the rain. Having heard from two traders who had recently visited Lagos, there is very little appetite for looking at new possible cargoes, and it may be after the end of the rainy season before traders even look at possibilities to offer material into this market. Logistical problems caused by rain is slowing business.
Receivers in Lagos have been unable to raise local prices to realistic levels, to take ensure funds are available for replenishment cargoes in the future. Buyers in Nigeria have not woken up to the facts surrounding prices, and are clinging on the hopes that numbers will revert to pre-Iran war levels.
There are also an increasing number of negatives in trading base oils into Nigeria at the moment. Receivers are unable to pay more than $1,900/t-$2,000/t CFR for SN500, which is currently too low to consider, given that current FOB, plus freight, plus margins would come out at around $2,750/t on a good day.
If SN900 were included in a cargo, using bright stock to blend, the price would come out at around $3,000/t, which receivers in Nigeria cannot even contemplate. When supplies start to become tight and stocks are getting low in tanks, then local prices stand a chance of moving higher, but probably not to the levels required.
Finance will be a major issue at the current inflated price levels, with the dangers of back-trading and non-performance leading to traders demanding full coverage for any cargoes under a letter of credit. Buyers have reacted with shock at this condition, have been spoilt over the past few years with some traders creating their own problems by offering open credit, payment in naira, and extended settlement terms.
So without availability, high prices, and financial risks unacceptable, Nigeria is cancelled.
The official exchange rate for the Nigerian naira was NGN 1,369 to the dollar and the black market rate around NGN 1,400 Monday.
No new offers have been made, nor will be made. For the sake of historical value, cargoes which arrived into Apapa, sold at prices valid prior to the Iranian war. Levels were around the following numbers.
Group I, FCA Apapa
SN150: $885/t
SN500: $925/t
SN900: $1,035/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.
Historic and current base oil pricing data are available for purchase in Excel format.