Weekly EMEA Base Oil Price Report

The escalation in petroleum product prices has been down to recent high levels attached to all crude oils. This has come about due to the impending realizations that Donald Trump may be planning major strikes on Iran following the U.S. midterm elections at the beginning of November, with the objective of opening up the Strait of Hormuz and bringing Tehran to the table for final negotiations on the Middle East war.

Secondly, prices for the two base oil groups mentioned are subject to faltering demand for finished lubricants in major markets such as Europe and the Middle East, where economic activity has been muted by U.S. tariffs and the effects of the war in Iran. Base oil demand has waned, limiting the ability of producers to raise prices to revert to a satisfactory premium over diesel, when trying to move material out of tank.

This amidst a backdrop of reduced production of Group I base oils where refiners have prioritized diesel output at the expense of base oils. Even Group II producers have resisted over-production, seeing demand in the doldrums and opportunities for arbitrage sales to export markets severely limited.

The market has seen some weird price moves over the past few weeks with a few majors lowering selling prices by considerable amounts, with one supplier reducing Group I and Group II prices by up to $400/t. It has to be added however, that the starting point for these price adjustments was particularly high, and these moves merely took numbers into a more competitive spread. Others have tried to hike prices but have been met with buyer resistance at every point, whilst one producer has announced that they may cease producing Group I base oils for an indefinite length of time.

The exception to the above scenario is the Group III markets in Europe and Middle East. The latter region should theoretically not have any problem with supplies of Group III base oils, but a dearth of available vessels to move material around the Middle East Gulf and the continuing closure of Hormuz has severely limited the movements of available barrels.

Europe remains extremely short of availabilities of all Group III grades with one offer heard last week at $4,600/t in respect of the 4 centiStoke grade on delivered basis for one truck load.

Base oil markets are split, on one hand demand is lacking, with segment having more than sufficient product to cover requirements and in another shortages and availability are the talk of the market.

The world awaits to see what action the U.S. will embark on in the Middle East, but veiled threats are being met with derision by Tehran, with counters being thrown into the ring prior to evidence of any definitive strikes. Timing appears to be of essence in any considered attacks on Iran, with proxies poised to go into action against targets which will have been prompted by the IRGC in Tehran.

Saudi Arabia, Israel, and Gulf States could all be targeted by Iran and proxies, should Trump decide to launch strikes against Tehran, plunging the Middle East once again into a major conflict zone, which will take time, effort and diplomacy for a conclusion to be reached.

Crude and Gas Oil Prices

Crude prices are being rallied by the impending threats being made against Iran from U.S. sources, but action will not take place – if at all – until after the midterm elections in the U.S. Hormuz effectively remains closed to marine traffic, although there are reports of crude and products safely getting out of the Gulf, being delivered to receivers around the globe.

Prices for Brent crude rose around $10 per barrel over the past week.

Dated deliveries of Brent crude: $117.25/bbl, December front month
West Texas Intermediate: $103/bbl, December front month
Low-sulfur gas oil: $1,521/t, November front month

These prices were obtained from London ICE trading late Monday, Oct 26.

Europe

European Group I supplies are relatively snug, but demand is totally missing from this market with explanations being mooted that because of a downturn in finished lubricant use, base oils are experiencing the domino effect and are suffering as a result.

Factory fills, and large contracts to supply major blenders around Europe just do not exist at the moment, with many commenting that it may be months, if not years before demand and economic growth returns to what was deemed normal.

Major economies with a high proportion of vehicle manufacturing and heavy industry, such as France, Italy, Spain and Germany have been suffering under U.S. tariffs, and coupled with industrial and commercial output affected across Europe, industrial and specialty lubricants are seeing lackluster demand.

Availabilities of Group I base oils are being increased with imports moving from Saudi Arabia, where traditional markets in the United Arab Emirate, India and Asia-Pacific are unavailable due to restrictions on shipping movements.

A cargo of Group I and Group II loaded out of Taiwan in August has arrived in Antwerp-Rotterdam-Amsterdam. This cargo sailed vis the Red Sea and transited Suez, saving voyage time and costs.

Refiners continue to prioritize diesel and jet fuel production over base oils, with continuing demand for distillates remaining high, due to a lack of imports moving from Middle East Gulf.

The relatively recent EU sanctions and ban on any hydrocarbon derivatives which contain Russian feedstock or crude. This precludes certain imports of gas oil from India and Turkey for example, further limiting the options for supplies.

Another cargo loaded from Yanbu for Antwerp-Rotterdam-Amsterdam, and will arrive in the next few days. 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 lower with the average Group I premium over diesel sinking to the lowest level seen for a number of years. One Eastern European supplier hiked prices in order to protect premiums over diesel.

Group I
European exports, FOB

No Group I cargoes have been verified leaving European sources for Nigeria. There has been a major’s cargo supplying contracts barrels into Ghana.

Northwestern Europe, FCA basis Antwerp-Rotterdam-Amsterdam
SN150: $1,685/t-$1,740/t
SN500: $1,795/t-$1,865/t
Bright stock 150: $2,225/t-$2,265/t

Eastern Europe, FCA
SN85: $1,875/t
SN150: $1,755/t-$1,900/t
SN350: $2,030/t
SN500: $ 1950/t-$2,250/t

One producer has indicated that their refinery may cease producing base oils for an indeterminate length of time.

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

Bright stock: $2,275/t

Pan-European, FOB/FCA
SN150: €1,715/t-€1,760/t
SN500/600: €1,785/t-€1,835/t
Bright stock 150: €2,100/t-€2,160/t

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

The euro’s exchange rate with the U.S. dollar was $1.11746 Monday.

The European Group II market appears to be coping with the temporary loss of production from Rotterdam, since the arrival of a large cargo of Group II grades from Singapore has alleviated most supply issues.

Group II base oils from that refinery in Rotterdam are not to be available until November.

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 three Turkish traders/blenders.

Following price adjustments price levels from one major suppliers are now put at around €2,225/t-€2,275/t for 100 neutral, 110N and 150N grades and €2,325/t-€2,360/t for 600N, but it is heard that these numbers are “flexible” and may be discounted depending on buyer status.

Group II, FCA basis
110N: €2,125/t-€2,275/t
150N: €2,135- €2,275/t
220N: €2,100/t-€2,145/t
600N: €2,175/t-€2,360/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.

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 which have been sourced from Middle East Gulf but 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.

Material which went through Hormuz was organized by producers in Sitra and Al Ruwais, but how this operation was accomplished remains private and confidential.

Cargoes from Indonesia are now part of the Group III scene in Europe, substituting for some of the missing barrels from Middle East Gulf.

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 is arriving into Antwerp-Rotterdam-Amsterdam during the next few days. Declarations have had to be made by producers to permit the importation of Indian barrels due to the possibility of Russian crude or feedstock being employed in the production of these Group III base stocks.

Chinese Group III base oils are offered into European buyers but there remain problems under the EU sanctions.

Buyers are requesting producing refineries make a written declaration that no Russian materials are employed or are part of the make up of the material being proposed for import into EU.

A number of refineries are not prepared to issue a document confirming that ‘no Russian material have been involved in the production’. This is preventing potential sales and imports of these grades, some of which carry excellent specifications and quality, particularly products produced from CTL technology which would potentially not include any Russian input.

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 re-load is unknown. It is also difficult to determine which trader is involved in the handling of the cargo.

With Cartagena nearing the end of the turnaround period, a cargo was been loaded for Antwerp, but without the 4 centiStoke grade, but which will hopefully be available from early next month.

An unusual cargo will load from Fujairah in United Arab Emirates, and will sail to northwestern Europe, It is assumed that this cargo will comprise of material from either Bapco or Adnoc. This cargo remains a mystery with no party owning up to taking this cargo.

A cargo which loaded out of Ulsan in South Korea has sailed around the Cape and is close to northwestern Europe and will discharge in Antwerp-Rotterdam-Amsterdam but with ETA second half November.

Prices for Group III oils with partial slates of finished lubricant approvals are tweaked higher at the top of the ranges.

Group III

Partly approved, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe
4 cSt: €3,850/t-€4,120/t
6 cSt : €3,795/t-€3,825/t
8 cSt: €3,775/t-€3,800/t

Fully approved, FCA Antwerp-Rotterdam-Amsterdam, Spain
4 cSt: €3,860/t-€3,875/t
6 cSt: €3,855/t-€3,870/t
8 cSt: €3,880/t-€4,010/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 no reported exports from any Russian Baltic ports, and it may be some time before any base oil exports are seen moving from the northern Baltic ports such as St. Petersburg and Vyborg, Russia. Putin will be lifting the current ban on diesel exports to entertain his “friend’s” 300,000-ton requirement for the U.S., although when cargoes will start to load and deliver has not been announced.

It is hard to see where the export quantities for Mr. Trump will come from since Russia is extremely short of diesel, continuing to import from Kazakhstan and Uzbekistan. the quantities may load from the Eastern seaboard where anything could take place, such as diesel from North Korea supplied on an STS basis.

Base oil supplies are extremely limited due to Ukrainian strikes on a number of refineries. Strikes continue even after Trump demanded that Zelensky halt all strikes and attacks on Russian refineries. Slavneft lost Group III and Group II production at Yaroslavl, and Lukoil lost Perm and Volgograd production.

Russia continues to import base oils from Kazakhstan and Uzbekistan, with imports also arriving from North Korea.

Black Sea & Turkey

Turkish traders are looking to supply base oils to the Russian market. It was heard that trading companies are considering selling quantities of Group II and Group III base oils to Russian buyers, since there does not appear to be availability of these grades. The quantities will be sold in flexi-tanks in containers and may be trucked to the Russian border.

More details are being sought from contacts, and the origin of the material would appear to be Taiwanese or South Korean. From conversations with the traders involved it would appear that this is an exceptionally lucrative trade, with dollar payments being received prior to shipment of the base oils.

A Yanbu cargo from Luberef is arriving in Gebze, Turkey, this week. The cargo consists of Group I and Group II base oils, perhaps the Group II grades could be sold to the Russian receivers?

Producers in Alexandria have supplied cargoes of Group I base oils into Gebze and Derince, Turkey, but blenders there have purchased the material on an FOB basis and have chartered small vessels to carry the cargoes, which are between 2,000 and 3,000 tons.

Motor Oil Hellas was approached to see if there are possibilities for supplies of a Group I cargo into receivers in Derince.

Tupras again reduced its prices for base oils sold from its Izmir refinery even though most other suppliers in the Eastern Mediterranean are implementing mark-ups.

Group I, FCA Izmir
Spindle oil: Tl 82,382/t, plus VAT Tl 18,505.70/t
SN150: Tl 81,201/t, plus VAT Tl 18,269.50/t
SN500: Tl 82,936/t, plus VAT Tl 18,616.50/t
Bright stock: Tl 99,290./t, plus VAT Tl 21,887.30/t

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

GS Caltex will send a small quantity of 4 and 6 cSt Group III base oils to “Europe,” which may be sold to Turkish buyers. The quantity is reckoned to be around 2,000 tons, 1,000 tons of each grade.

It was suggested that this quantity will be delivered in flexies in FEU containers. Normally supplied in smaller TEUs.

Fully-approved Group III from Cartagena, Spain, is not being supplied to receivers in Gemlik.

Middle East

It has been a relatively quieter week in Saudi Arabia following the last Houthi attacks, but these were reports of infrastructure being damaged in drone attacks. Nothing major was reported from the East/West pipeline or from Yanbu.

Saudi representatives traveled to Tehran Monday for discussions on proxy involvement and the future for Saran and Saudi Arabia. Other Gulf States were present.

Meanwhile the Bab-al-Mandeb Strait remains firmly under the control of the Houthis with Saudi flagged vessels prohibited from trying to transit the strait. Perhaps this will be a topic for discussion in Tehran.

Yanbu refinery has effectively started the turnaround which will also include work to be undertaken in preparation for the start-up go Group III production which is still on track for the year end.

Luberef have sent a number of cargoes of Group I and Group II base oils to Antwerp-Rotterdam-Amsterdam, and also to traders in Turkey. The material in Antwerp-Rotterdam-Amsterdam will be resold by S-Oil as part of Saudi Aramco.

Cargoes of base oils from Yanbu and Jeddah are significantly down over the last three months with Indian and far eastern receivers being mostly affected. South African receivers are also now looking for supplies of Group II grades, but this may be difficult given the Bab-al-Mandeb situation.

The shipping enquiry for a vessel to load out of Yanbu and discharge in Lagos, remains open, but with the refinery going into turnaround and prices above Nigerian expectations, this may prove impossible to put a deal together.

Supplies of Group I and Group II base oil are getting through blenders in Middle East Gulf locations. Some of the base oils moving into the UAE are moving from Fujairah and Sohar by truck, and in flexies in containers on the train between Fujairah/Dubai/Abu Dhabi.

From UAE ports such as Hamriyah and Ras al Khaimah small cargoes and flexies are moving to Bahrain, Kuwait and Qatar, whilst Luberef have been trying to deliver quantities across the Kingdom from Yanbu by truck.

Group III base oils were gradually moving out of Middle East Gulf using local vessels to transit to STS in the Gulf of Oman, or to the West Coast of Indian ports, but this operation appears to have halted for the time being, with no reported parcels being STS or discharged into Indian ports.

This report has made enquiries to Shell to ascertain the latest position and intended future for the installation in Ras Laffan. One base oil train is running, whilst the other train will complete repairs towards the end of Q1 2027. The report has not received a reply from the relevant parties within Shell International.

Traders are having to hike selling prices in local markets in Europe and U.S. but availability is the name of the game with prices only a secondary consideration.

There are no indications for FOB price levels being paid to Bapco or Adnoc, with this element remaining private and confidential. With producers organizing the bridging shipments from the refinery storage, these deals will not figure as a normal FOB sale. Supplies of Group I and Group II in the UAE are being gradually replenished, but there is no third-party trading on an ex tank basis, with no reported FCA sales. Replenishment stocks are limited, and are utilized in small blends to maintain availability of finished lubes to public and government.

With base oils being supplied into the Middle East Gulf on an ad hoc basis FCA prices are suspended until base oils are routinely discharged into storage from sea-going vessels. Prices established currently would be artificial and would not reflect the normal local market.

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

Group III FCA prices are therefore suspended.

Netbacks in respect of Group III base oils ex Al Ruwais, are suspended since it has not been possible to ascertain FOB levels and to whom the sales are being made. Netbacks from Sitra are suspended.

Africa

In Egypt, at El Dekeila port, a base oil cargo made up of many parts, amounting to around 6,000 tons in total was loaded, The cargo sailed on Sept. 29 for Lagos in Nigeria.

Two cargoes, one of 3,000 tons and another of 4.2,000 tons of Group I base oils loaded ex Alexandria for Turkish charterers and sailed the short voyage to Derince and Gebze. Cargoes were bought on an FOB basis.

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

A bright stock cargo out of Yanbu loaded for EGPC in Alexandria in Egypt. Discharge should take place during next week.

A large Group II cargo has loaded in U.S. Gulf Coast last week and is approaching Durban port to effect discharge. Another large base oil cargo loaded out of Rotterdam and Fawley prior to the supply interruption to Group II base oils.. The vessel will discharge the full cargo in Durban in early November.

Fawley refinery has gone into turnaround and will be down for around another five weeks, ahead of scheduled downtime.

It is not considered that any cargoes of Group I will be loaded for West Africa during the Fawley turnaround time. Just before the maintenance started, a 5,000 tons cargo of three Group I grades loaded covering the Ghana contract in Tema. This cargo movement is frequently misreported as going into Apapa In Nigeria. it is important to distinguish between the two West Africa locations, since the trade is markedly different in Ghna than Nigeria. 

Receivers in Nigeria are taking a parcel of 3,000 tons of SN900 in a cargo which loaded out of El Dekeila in Egypt. The cargo loaded on 29th September, and arrived in Lagos three days ago on the 23 October. The vessel is expected to discharge in Lagos for three receivers, sharing SN900 and SN500 base oils on board. The cargo appears to have been covered under letters of credit for each receiver. The total cargo was 6,000 tons of two grades SN500 and SN900.

The consensus of opinion is that this cargo comprised of Russian base oils which may have been built up in storage over time, and it would appear that blending of the SN900 has been accomplished in shore tanks prior to loading. How the Russian base oils were accumulated in tank in El Dekeila is largely unknown, but this report will enquire of the trader involved to see if some light can be cast over the operation. Landed prices are not yet revealed.

An interesting feature of this cargo was that the parcel was only around 6,000 tons in total, but the vessel was 20,000 tons dwt, leaving either great deal of space unused, or the vessel carried other part cargo to Nigeria.

The NNPC base oil tender was awarded, and the cargo from an Indian port arrived in Nigeria, discharging into NNPC storage.

There remains a shipping inquiry for a vessel to load around 10,000-12,000 tons out of Yanbu and discharge in Lagos. With Yanbu going into turnaround and the status of FOB sales in Yanbu not known, this cargo seems unlikely, but ….

Would the vessel would go through Suez, transit the Mediterranean and sail south to Nigeria, rather than risk  going through the Bab-al-Mandeb Strait with the Houthi presence.

Buyers continue to look for levels around $1,690/t-$1,695/t, but these levels are too low for many traders to consider.

The official exchange rate for Nigeria’s naira was NGN 1,335 Monday while the black market rate was 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.