Weekly EMEA Base Oil Price Report

It will be interesting to see if Russia can actually put together the quantities of diesel to be exported, since there are many reports of domestic shortages, and with the continuing bombardment of refineries and storage facilities, the situation will not improve.

Commentators in the U.S. and abroad have launched scathing attacks on Trump for this arrangement, saying that it will have no effect on the price of diesel in the U.S., or anywhere else for that matter, but will merely boost Putin’s war chest in the continuing war with Ukraine.

All experts have acknowledged that the real reason behind high global diesel prices has been the war in Iran, initiated by none other than Donald Trump. After his country was heavily bombed by Russia during during a three-day energy target ceasefire announced by Trump, Zelenskyy resumed aerial strikes on Russian refineries and infrastructure.

Kyiv has targeted installations around St. Petersburg where Putin is hosting what is known as the Russian Davos meeting, which invites representatives from around the world to discuss potential investment in the Russian economy. The sight of thick black smoke emanating from a nearby refinery bombing is a clear mar to the event.

In the Middle East, the Strait of Hormuz remains closed, as does the Bab-al-Mandeb Strait in the southern Red Sea, strangling most movements of crude and petroleum products from within the Middle East Gulf and the Red Sea.

Even with the reopening of Saudi Arabia’s East-West pipeline, the only crude and product movements are northward through the Suez Canal. The Saudi hub at Sidi Kerir in Egypt is being used to supply cargoes of crude to European refineries, some of which had been running dangerously low on stocks.

Trump has declared that there will be no strikes against Iran until after the U.S. midterm elections, in which his Republicans party could lose control of the legislature. The U.S. blockade of Iranian ports continues and appears to be driving up inflation and unemployment in Iran. Manufacturing and production of goods has all but ceased, and with many in the country living on a hand-to-mouth existence, there is growing unrest in the streets. Sources located in Bander Abbas describe a grim scene, but the country’s Islamic Revolutionary Guard Corp is dug in.

There is no sign, though, of real negotiation to reopen the Strait of Hormuz. The outcome from all of the above is that crude oil prices remain high and product prices are running in tandem. Base oil prices across the EMEA regions however, are weaker due to reduced demand for both automotive and industrial finished lubricants.

The premium of average base oil prices versus diesel has dropped to the lowest level for a number of years, and is only being propped up by higher API Group III prices in markets such as Europe and U.S. Group I and Group II averages would show a greatly reduced premium, pushing refiners to continue optimizing distillate output, at the expense of base oils.

There are also number of major refinery turnarounds planned for the coming months, which will restrict growing surpluses of base oils, perhaps reducing downward pricing pressure.

Crude and Gas Oil Prices

Crude prices remain bolstered by the lack of supplies coming out of the Middle East Gulf and will likely remain high until shipments flow freely through Hormuz.

The crack between Brent crude and West Texas Intermediate has narrowed to around $7 per barrel. Some players have suggested WTI could move higher than Brent if U.S. crude demand ramps up toward the midterm elections.

Dated deliveries of Brent: $108.60/bbl, December front month
WTI: $101.05/bbl, November front month
Low-sulfur gas oil: $1,458/t, November front month

These prices were obtained from London ICE trading late Monday, Oct. 19.

Europe

The good news heard during last week was that following a serious fire at a Corinth, Greece, refinery, an unofficial announcement suggested that its Group I base oil plant was not affected and that normal production resume in coming weeks.

Realistically, European Group I supplies remain tight despite poor demand stemming from a lack of take-up for finished lubricants. This is not confined to automotive lubes, as some parties have suggested, as a large downturn in vehicle manufacturing has also eroded consumption of industrial lubes. Major economies such as France, Italy and Germany have been hurt by Trump tariffs.

Availabilities of Group I base oils are rising on imports from Saudi Arabia. Also, another composite cargo of Group I and Group II – loaded out of Taiwan in August – has arrived in Antwerp-Rotterdam-Amsterdam. This cargo navigated through the Red Sea and transited Suez, saving voyage time and expense.

There have been reports of two Group I cargoes moving from Mediterranean sources to Nigeria, but suppliers in that region are unable to confirm whether availabilities would allow larger quantities of solvent neutral grades to be sold for export. Prices would have to be below numbers currently being touted in the market and in one case the base oils would have to be priced below gas oil levels, which seems highly unlikely.

This report will contact possible sources to check for availability and perhaps establish if the reports can be confirmed. There is a possibility in one case the material may have been below normal specifications, with quality issues.

Refiners continue to prioritize diesel and jet fuel production over base oils, with demand for those products remaining high, due to a dearth of imports moving from the Middle East Gulf, but also the relatively recent EU sanctions on any hydrocarbon derivatives containing Russian feedstock or crude. This precludes certain imports of gas oil from India and Turkey for example, limiting further the options for supplies.

Another cargo loaded from Yanbu for Antwerp-Rotterdam-Amsterdam, arriving around the end of this month. This parcel is believed to be a combination of Group I and Group II base oils and will be resold FCA and on a delivered basis.

Prices are generally maintained because sellers are keen to hold levels at current numbers, since the Group I premium over diesel has sunk to the lowest seen for some years. In Eastern Europe, solvent neutral 150 is discounted below the light neutral and substantially below SN500.

Group I

European Exports, FOB

Market being checked for reported parcels going to Nigeria

Northwestern Europe, FCA basis Antwerp-Rotterdam-Amsterdam
SN150: $1,765/t-$1,825/t
SN500: $2,010/t-$2,055/t
Bright stock 150: $2,245/t-$2,280/t

Eastern Europe, FCA
SN85: $1,875/t
SN150: $1,755/t
SN350: $2,030/t
SN500: $2,250/t

Prices are negotiable, and light neutrals have been heard at $1,645/t, FCA.

Mediterranean, FCA Spain, Italy
SN150: $1,895/t
SN600/500: $2,025/t
Bright stock: $2,275/t

Pan-European, FOB/FCA
SN 150: €1,745/t-€1,795/t
SN500/600: €1,820/t-€1,900/t
Bright stock 150: €2,125/t-€2,180/t

Pan-European prices are assessed on an aggregate basis taking prices from Scandinavia, Poland, France, Germany, Benelux, Spain, Italy, Greece, the U.K., and Baltic States, where prices are currently available.

The euro’s exchange rate with the U.S. dollar exchange rate was $1.12090 Monday.

European Group II markets continue to be affected by the temporary loss of production from Rotterdam, but the arrival of a large cargo of Group II grades from Singapore will alleviate any shortfall. Group II base oils will not to be available from Rotterdam until November.

The vessel from Singapore has discharged part of its cargo in Valencia, Spain, replenishing hub storage. Then it delivered the remaining cargo in Rotterdam.

Another cargo has loaded out of Taiwan with destination given on shipping reports as “Europe.” This cargo contains a large quantity of Group II base oils and has been purchased by a cohort of two or three Turkish traders. The cargo is due to arrive in Gebze later this week or early next week.

Cargoes loaded along the U.S. Gulf of Mexico coast prior to Storm Isaias are bound for Europe and will supplement arrivals from Asia-Pacific and the Middle East.

Group II prices in Europe have softened again to around €2,125/t-€2,150/t for 100N/110N and 150N grades, while 600N is at €2,175/t-€2,200/t.

Group II, FCA basis
110N: €2,125/t-€2,150/t
150N: €2,135/t-€2,150/t
220N: €2,100/t-€2,125/t
600N: €2,175/t-€2,200/t

Prices refer 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.

The Group III market in Europe is evolving each day and week, with the arrival of various supplies of Group III base oils being sourced from new locations such as India. Barrels that were sourced from the Middle East Gulf but are arriving from Indian ports or transferred ship to ship in the Gulf of Oman remain relatively rare due to the logistical problems of moving material through Hormuz. Some material organized by suppliers in Sitra, Bahrain, and Al Ruwais, United Arab Emirates, escaped the gulf, but exactly how this feat was accomplished remains unknown.

Cargoes from Indonesia are becoming part of the Group III fabric in Europe, substituting for some of the Middle East Gulf barrels missing over the past few months.

Group III cargoes from India are arriving into Antwerp-Rotterdam-Amsterdam, with some of the material having been sourced out of Sitra whilst other supplies show Indian origin and specifications. A parcel will arrive into Antwerp-Rotterdam-Amsterdam around the end of this month. What is not clear as yet is what designation the certification of origin contains, whether the cargo was in transit through an Indian port or whether the material is designated as “Indian origin.” Declarations have had to be made to authorize the importation of Indian barrels due to the possibility of Russian crude or feedstock being used in the production of these Group III base stocks.

Chinese Group III base oils are being offered into European buyers but there are problems under the EU sanctions. Buyers are requesting that producing refineries make a declaration that no Russian components are employed or are part of theme up of the material being proposed for import into EU.

A number of refineries are not prepared to issue such documents, and this is preventing potential sales and imports of these grades, some of which carry excellent specifications and quality, particularly products produced from coal-to-liquids technology.

Another cargo has loaded from Sitra and appears to have made it out of the gulf, but whether this will be an STS deal or an Indian reload is unknown. It is also difficult to determine which trader is involved in the handling of the cargo.

With the Cartagena, Spain, Group III joint venture in a maintenance turnaround, a cargo has been loaded for Antwerp, but obviously without the 4 centiStoke grade.

An unusual cargo will load from Fujairah, UAE, and sail to Northwestern Europe, presumably consisting of material from either Bapco or Adnoc. This report is trying to research this cargo to clarify charterers and how the cargo arrived into Fujairah port be loaded. Quantity is not known, but the vessel is large, and the Group III base oils may have formed part of the cargo, which also contains other petroleum products.

A cargo that loaded out of Ulsan, South Korea, has sailed around Africa’s southern tip and is proceeding to Antwerp-Rotterdam-Amsterdam to discharge. Arrival is expected during the second half of November.

Prices for Group III oils with partial slates of finished lubricant approvals, FCA ARA and NW Europe, are maintained at the latest higher levels. Prices for rerefined Group III are unchanged this week, but these oils are only available to contracted or existing buyers.

Group III

Partly approved, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe
4 cSt: €3,600/t-€3,820/t
6 cSt: €3,595/t-€3,675/t
8 cSt: €3,575/t-€3,600/t

Fully approved, FCA Antwerp-Rotterdam-Amsterdam, Spain
4 cSt: €3,765/t-€3,845/t
6 cSt: €3,765/t-€3,825/t
8 cSt: €3,840/t-€3,885/t

All the above products sold on a delivered basis are subject to transportation charges, to be added to the prices above.

Rerefined Group III, FCA Germany
4 cSt: €3,545/t
5 cSt: €3,540/t
6 cSt: €3,525/t

Baltic Sea

There are obviously no reported base oil exports from the Baltic ports, and it may be some time before any are seen.

Presumably Russia has lifted its current ban on diesel exports, but it is hard to see where the export quantities for Mr. Trump will come from since Russia is net short of diesel fuel at this time and is importing from Kazakstan and Uzbekistan.

Base oil supplies are extremely limited due to Ukrainian strikes on various refineries. Whether these strikes will continue after Trump demanded that Ukraine halt attacks on Russian energy facilities remains to be seen.

Group II and III production at the Slavneft plant in Yaroslavl has been knocked out.

Russia continues to import base oils from Kazakhstan and Uzbekistan as well as North Korea.

Black Sea & Turkey

A reversal in trading patterns may be about to take place, with Turkish traders looking at supplying base oils into the Russian market. It was heard that two known trading companies are considering selling quantities of Group II and III base oils into Russia. The quantities will not be large and will be sold in flexi-tanks in containers, possibly CIF Novorossiysk port. More details are being sought from contacts, but nothing has been disclosed regarding the origin of the material. One source disclosed that prices were higher than could be achieved in other markets and that all sales would be priced in dollars.

The previously reported Yanbu cargo is arriving in Gebze this week or next. The cargo is made up of Group I and Group II base oils.

Producers in Alexandria have supplied quantities of Group l base oils into Gebze and Derince.

Now that Motor Oil Hellas has base oil production cleared following the explosion and fire, they may offer a quantity of Group l neutrals into receivers in Derince.

Domestic prices for Group I oils from the Tupras refinery in Izmir have been reduced.

Group I, FCA Izmir
Spindle oil: Tl 84,861/t, plus VAT Tl 19,001.50/t
SN150: Tl 83,680/t, plus VAT Tl 18, 765.30/t
SN500: Tl 85,415/t, plus VAT Tl 19,112.30/t
Bright stock: Tl 101,769/t, plus VAT Tl 22,383.10/t

Sales incur a standard loading charge of Tl 10,146.50/t that is added to the prices above.

The GS Caltex tender does not appear to have been processed, perhaps because conditions were too onerous to lift certain Group II necessary to access the Group III oils.

GS Caltex will send a small quantity of 4 and 6 cSt Group III base oils to “Europe,” possibly to Turkish buyers. The quantity is reckoned to be around 1,000 tons of each grade, but it is still not known whether this will be done in flexies or in bulk.

It was suggested last week that this quantity will be delivered in flexies in 40-foot equivalent containers because the quantities are larger than normally supplied in 20-foot equivalent containers.

Fully approved Group III from Cartagena, Spain, is no longer being supplied to receivers in Gemlik.

Middle East

It has been a quiet week in Saudi Arabia following the Oct. 10 Houthi attacks on civilian airports, when there were fatalities and many injuries. Aircraft were damaged and destroyed during the strikes, which were mainly centered on King Khalid International Airport in Riyadh. There has been no reaction as yet from Saudi government or armed forces, but it is a certainty that some form of retribution will take place.

Meanwhile the Bab-al-Mandeb Strait remains under the control of the Houthi militia, with no Saudi-flagged vessels attempting to transit the channel.

Yanbu refinery will go into turnaround around the end of October, whilst Luberef has sent a number of cargoes of Group I and Group II base oils to cover buyers in Antwerp-Rotterdam-Amsterdam, and also traders in Turkey.

Cargoes of base oils from Yanbu and Jeddah, among other products and crude, are significantly down over the past three months. Few base oil cargoes have passed through the strait, but those that did may have been in vessels flying Indian, Pakistani or Chinese flags, which will be granted safe passage from the Houthis and from the IRGC in Tehran.

The shipping inquiry for a vessel to load out of Yanbu and discharging in Lagos remains open, but FOB prices may too high to get to target numbers in Lagos. This report is not aware of Luberef offering FOB prices to charterers.

Supplies of base oil are filtering through to blenders in Middle East Gulf locations. Most of the base oils moving into the gulf are moving from Fujairah and Sohar by truck, and in containers on the train between Fujairah and Dubai or Abu Dhabi.

From UAE ports small cargo quantities and material in flexies is moved to Bahrain, Kuwait and Qatar, whilst Luberef has been trying to deliver quantities across the Kingdom from Yanbu.

Group III base oils are moving out of the Middle East Gulf using local vessels to transit to STS in the gulf of Oman or to West Coast of India ports. This has now quickly become an accepted method and route to get material from Al Ruwais and Sitra out of the Gulf.

This report inquired to Shell to ascertain the latest position and intended future for the installation in Ras Laffan. One base oil train is capable of running, whilst the other train will complete repairs towards the end of the first quarter of 2027. This columnist has asked if production running now is getting to users within the gulf, or if the quantities are being stored for future shipments when Hormuz is reopened.

The operation to STS and Indian ports is expensive but with no other alternatives it has become the acceptable mode of shipment. Traders are having to hike selling prices in local markets in Europe and the U.S., but the emphasis is on availability and access to product, with prices being proved to be only a secondary consideration.

There are no indications for FOB price levels being paid to Bapco or Adnoc, and this element may remain secret. With producers organizing the initial shipments from refineries, the economics may be complicated and may not figure as an FOB or CFR sale.

Supplies of Group l and II in the UAE are being gradually replenished, but there is no trading on an ex tank basis and no FCA sales have been reported. Replenishment stocks are strictly limited and are being used in small blends to maintain availability of finished lubes to retail and government sectors.

With base oils being supplied into the Middle East Gulf on an ad hoc basis, listing here of FCA prices remains suspended until base oils are again discharged into storage from sea-going vessels. Any prices established now would be artificial and would not reflect the normal local market.

Group III base oils, FCA Hamriyah/Sharjah port, or delivered by RTW in UAE and Oman, are available from Adnoc at Al Ruwais. There is no market for FCA or delivered sales at this time. UAE prices for Group III are therefore suspended, too.

Netbacks for Group III base oils ex Al Ruwais, are suspended since it has not been possible to ascertain selling levels or to whom the sales are being made. Netbacks from Sitra are also suspended.

Africa

Two cargoes – one of 3,000 tons and another of 4,200 tons – of Group I base oils loaded ex Alexandria for receivers in Derince and Gebze. Cargoes are bought on an FOB basis, and the buyers are acting as charterers.

Turkish buyers have been purchasing re-refined base oils in flexies from sellers in Yanbu and Suez but may be looking to take bulk rerefined base oils from the re-refiner in Yanbu.

A bright stock cargo out of Yanbu has loaded for EGPC in Alexandria. The discharge is due to take place during the first week of November.

A large Group II cargo has loaded along the U.S. Gulf Coast last week and is now en route to Durban. Charterer’s agents are now giving an estimated date of arrival of Oct 27.

Another large base oil cargo loaded out of Rotterdam and Fawley prior to the supply interruption to Group II base oils. Fawley refinery will go into turnaround for about ten weeks, with stocks of Group I and Group III base oils being laid down to cover customers’ estimated requirements during the maintenance period. The vessel will discharge the full cargo in Durban in early November.

It is not considered that any cargoes of Group l will be loaded for West Africa during the Fawley turnaround time. Just before the maintenance started, a 5,000-ton cargo of three Group I grades was loaded for the Ghana contract in Tema, covering the period of the turnaround.

It is anticipated that one of the priority loadings will be for the three destinations in West Africa as soon as maintenance is completed.

In Nigeria, prices remain problematic for buyers and sellers looking for low priced Group l base oils. Receivers in Nigeria have ditched taking SN 900, because that grade is much more expensive than SN500 which will now be the highest viscosity grade being imported.

The NNPC base oil tender has been awarded, and the cargo from an Indian port has arrived in Lagos and is assumed to be discharging into NNPC storage.

A trader is still looking to load a cargo from South Korea during October and has offered various prices from $1,690/t-$1,750/t CFR. It is considered that the freight element of this cargo will make the prices unacceptable to buyers.

The problem is that a vessel undertaking the voyage from Ulsan to Lagos will also have to price in ballasting from West Africa to the Mediterranean since CPP cargoes aren’t available. Vegetable oils may be an option, but cleaning tanks after carrying those can be expensive and time consuming.

There remains a shipping inquiry for a vessel to load around 10kt out of Yanbu and discharge in Lagos. This deal is not done as yet, with one possible vessel remaining open.

It is thought that the vessel would go through Suez, transit the Med and sail south to Nigeria, rather than risk going through the Bab-al-Mandeb Strait with the Houthi presence. Buyers are looking for levels around $1,690/t-$1,695/t, but these levels are too low for traders to consider.

The continuing problem for some traders is that without receiving a letter of credit covering the total quantity and freight and then adding in higher prices. Traders are not in the business of financing Nigerian buyers, especially at small margins, and other associated Nigerian problems which are bound to arise.

The official exchange rate for the Nigerian naira was NGN 1,334 Monday, while the black market rate was around NGN 1,380.

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.