Some buyers had been expecting to benefit from such year-end sales with lower prices, but looking across the regions, many will be disappointed. Prices are holding up after weakening in recent months.

There were significant developments the past week in the fighting between Ukraine and Russia and Israel’s war in the Middle East – but markets still seemed immune to the conflicts, as crude oil prices remained subdued, keeping base oil values under downward rather than upward pressure.

There were suggestions of a possible peace settlement for the Ukraine war even before Donald Trump returns to office in the United States. Ukrainian President Volodymyr Zelensky said he would enter negotiations for a peace deal with current territorial holdings and diplomatically seek a return to original borders.

In the Middle East, Israel’s tenuous ceasefire with Hezbollah continued without breaches. Another conflict reared its head, as a confederation of rebel groups in Syria captured the city of Aleppo and pressed onward toward President Bashar Al-Assad’s base in the capital of Damascus. More potential disruptions developed in Europe where France and Germany grappled with monetary and political crises, respectively.

Through it all, crude and feedstock prices remain in limbo, perhaps indicating that concerns of disruptions have already been built into rates. Dated deliveries of Brent crude posted Monday at $72.05 per barrel, now for February front month settlement, only marginally lower than last week. West Texas Intermediate was also nearly steady at $68.30/bbl, for January front month.

Low-sulfur gasoil values fell around $10 to $670 per metric ton, for December front month. All of these prices were taken from London ICE trading late Dec. 2.

Europe

API Group I exports from Europe have largely halted again, although a number of cargoes were delivered from Mediterranean refineries to receivers in Turkey the past month. These could be designated as export sales, with some material also moving into Egypt and Morocco.

Large parcels to West Africa, the Middle East Gulf and India remain elusive, the controlling factor being that few refiners have large quantities of Group I available for loading, especially at prices necessary to entice buyers. For now, suppliers can find ample customers willing to pay more.

The few low-priced deals reported around mid-November have not been repeated, and there are no reports of any Group I refinery looking to move large quantities of material prior to the end of December.

European domestic prices appear to have stabilized, with few reports of heavy discounting to sell extra barrels during December. Prices in Eastern Europe have not changed from November, remaining around around $925/t for solvent neutral 150 and $980/t for SN500. Demand is still lacking, though suppliers look for it to pick up in the New Year.

The economic situations around Europe could interfere with such forecasts as some observers have a depressing outlook for finished lubricant demand going forward into February and March.

Mediterranean prices are also unchanged at between $930/t and $945/t for SN150, $980/t-$1,000/t for SN500 and $1,180/t-$1,220/t for bright stock.

Overall European FCA euro prices have stabilized after falling in late November and are at €900/t-€925/t for SN150 and €940/t-€985/t for SN500. Bright stock is the only grade showing a degree of strength due to restricted availability, rising around €25/t-€30/t to €1,190/t-€1,235/t depending on quantity and availability.

The euro’s exchange rate against the dollar was close to flat posting at $1.04904 on Monday. The average price differential between Group I sales within Europe and theoretical export sales remains €10/t-€25/t.

European Group II prices have also steadied following adjustments during November. With the euro remaining weak against the dollar, importers buying in dollars are under pressure to maintain euro prices at current levels. Importers have to sell in euros within the European Union, which creates problems when converting back to dollars for accounting purposes. The currency movement has put pressure on sellers to either price in dollars or to maintain higher prices to buffer against exchange rate differences.

European Group II prices are unchanged at €1,085/t-€1,120/t for 110 neutral and 150N, €1,125/t-€1,150/t for 220N and €1,175/t-€1,210/t for 600N. These prices apply to a wide range of Group II oils including European production plus imports from the U.S., the Red Sea and Asia-Pacific imported in bulk.

In spite of continuing price pressures, the European Group III market remains a targeted market for producers in the Middle East Gulf and Asia-Pacific who are heaping pressure on distributors to accept extra cargoes. This is leading to an oversupply that creates more price pressure.

Producers have openly admitted they would rather sell at lower prices to move larger quantities of Group III grades into the European market. The problem is that the market has reached a saturation point and cannot absorb further quantities of material, which will only sit in tank for extended periods due to low demand.

From a cash flow standpoint, distributors are declining to accept further parcels unless some financial arrangements are put in place as compensation for extended storage periods. Storage space is limited under current contracts.

With demand weak across the main European markets in Germany, the Benelux countries and France, prices have fallen moving into December. One seller is offering 4 centiStoke oil at €1,145/t, while others are charging €1,210/t-€1,225/t for 4 and 6 cSt, on an FCA basis ex Antwerp-Rotterdam-Amsterdam.

The supplier expecting a replenishment cargo to arrive into Rotterdam prior to New Year has confirmed that availability will be guaranteed following discharge.

European prices for Group III oils with partial slates of finished lubricant approvals are therefore assessed at €1,145/t-€1,225/t for 4 and 6 cSt and at €1,225/t-€1,265/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Prices for rerefined Group III grades remain unchanged at €1,135/t-€1,175/t, on an FCA basis ex rerefinery in Germany.

Prices for Group III oils with full slates of approvals are at €1,775/t-€1,810/t for 4 and 6 cSt and at €1,820/t-€1,835/t for 8 cSt, on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain.

Baltic and Black Seas

Problems obtaining information on Baltic shipping movements continue to complicate the task of reporting on cargoes loading out of this region. It is believed that Lukoil loaded another vessel with a cargo around 5,000-6,000 tons of SN150 and SN500 for Turkey. This cargo will be discharged in Gebze, and some of its content has been bought directly by Turkish blenders.

Rosneft prices into Turkey are rumored to be exceptionally low, with this company basically dumping quantities of base oils into that market because there is nowhere else for the material to go. CFR prices of $600/t and below are mentioned.

FOB prices for SN150 and SN500 offered ex St. Petersburg or Vyborg, Russia, are calculated from prices being offered or delivered into Nigeria or Singapore.

Lukoil FOB Baltic numbers are assessed at around $760/t-$780/t for SN150, $790/t-$810/t for SN500 and $855/t for SN900 blended specifically for lubricant manufacturers in Nigeria.

Base oils from Europe and other areas such as the U.S. are moving into Baltic ports in Lithuania and Latvia, but much of it is delivered in flexi-tanks since this is simpler to handle in places such as Riga and Liepaja, Latvia, where shore storage is not always available. Quantities of Group II and Group III base oils are being used now in the Baltic States as blenders begin producing to updated finished lube formulations.

In Turkey there has been no further news on a new Tupras tender, and it is questionable whether the company would have material for a in quantity to make up a parcel large enough to ship. Following the fire at the refinery in Izmir it is not clear if base oil production has been affected, and if so, when would production be resumed to full output.

A Turkish lubricant producer for Group I and II base oils, has reduced offered prices across the board, and at the same time Russian barrels are being touted around the Black Sea by a number of traders.

SN900 remains priced at $1,100/t, ex works Gebze. This grade will be blended using bright stock, hence the high price. SN150 is now priced at $790/t and SN500 at $800/t, these last two grades being from Russia and Uzbekistan. Taking into account estimated costs for handling, storage and a margin for the seller, the CFR prices for both grades could be close to $640/t.

Tupras’ prices for the Turkish market are still being published, but there are doubts as to avails due to the compressor fire at the refinery. Those prices are 35,462 lira/t for spindle oil; Tl 31,593/t for SN150; Tl 33,721/t for SN500; and Tl 45,038/t for bright stock. Prices are in lira and are offered ex rack, plus a loading charge of Tl 5,150/t.

Group II FCA levels remain at $890/t-$1,100/t for 110N,  220N and 350N, the latter grade priced much higher than the two lighter grades, which are both right around $890/t. Higher specification 500N is now at $1,500/t while 150N of a similar quality is available at $1,150/t. These last two grades are supplied from Taiwan. Group II base oils are imported from the Red Sea, the U.S., South Korea and Taiwan.

Group III oils with partial approvals or no approvals, offered on an FCA basis, include 4 cSt oils from Tatneft in Russia. Prices are heard at around €1,195/t. Quantities of fully-approved Group III grades from Cartagena, Spain, are being delivered into Gemlik and are priced at €1,960/t-€1,995/t, basis FCA.

Middle East

A number of large cargoes of Group I and Group II base oils are reported loading from Yanbu, Saudi Arabia, and Group I solvent neutrals being loaded out of Luberef’s other refinery in Jeddah. The Group II base oils are bound for Mumbai anchorage and the United Arab Emirates, while the Group I grades are moving into the U.A.E. only. Luberef has also supplied light-viscosity Group II base oils into the Turkish market, and these stocks are being resold ex works.

The ceasefire between Israel and Hezbollah in Lebanon is now in place and has been operating for nearly one week. The understanding is that Hezbollah will withdraw from the south of Lebanon and an international force will eventually police this region, ensuring that Hezbollah to not move back and resume firing missiles into northern Israel. Similarly, Israeli troops will retreat into Israeli territory and will not cross into Lebanon.

It is agreed that the ceasefire will last for at least 60 days and may be extended should both sides agree. Iran has been quiet regarding this treaty and has not voiced any opinion to the media or press.

This arrangement could open up Lebanese ports, including Tyre and Beirut and could allow imports of base oils to once again flow into this area. Having said that, Syria is now in a war situation. Iranian backed militias from Iraq and Russian aircraft are aiding the Assad government to re-establish Syrian governance.

Prices for imported Group I material arriving into Middle East Gulf ports, predominantly the U.A.E., are unchanged at $990/t-$1,020/t for SN150, $1,035/t-$1,065/t for SN500 and $1,125/t-$1,180/t for bright stock, all on a CIF/CFR basis ex U.A.E. ports. These prices refer to imports from the U.S., Thailand and India.

There have been talks of looking at imports from Europe, but the logistics and economics are against this happening since vessels would have to detour around the Cape in South Africa to avoid the Houthi attacks in the Red Sea.

Russian base oil cargoes continue to arrive into Hamriyah, U.A.E. The cargo for Nigeria that was transferred ship-to-ship to the vessel FPMC 35 has now arrived into Apapa port in Lagos. The vessel arrived Nov. 29 and is presumed to be discharging the cargo imminently, assuming the berth and customs authorities allow it.

Russian prices on a Hamriyah anchorage basis, are heard to be much lower than previously reported, with some sources mentioning prices in the mid-$600s on a delivered basis. From Turkish CFR prices this may be possible from Rosneft supplies, although Lukoil was the main seller in the U.A.E. Prices are now put in a range of $645/t-$785/t for SN150 and $655/t-$795/t for SN500.

The Group III tender from Bapco’s refinery in Sitra, Bahrain, awarded to a European trader who is reportedly taking the cargo to Europe. Previously, another trader was active in purchasing a quantity of around 15,000 tons from Bapco, before selling the quantity in Europe. It may be the case that the original trading company is working with the former trader to execute the deal since the primary trader will have clients able to take quantities of the cargo.

Group III base oil netbacks for material loaded from Al Ruwais, U.A.E., and Sitra and moving to Europe are unchanged at $1,125/t-$1,200/t for 4, 6 and 8 cSt grades.

Netbacks for gas-to-liquids Group III+ base oils ex Ras Laffan, Qatar, are unchanged at $1,295/t-$1,325/t. Shell cargo economics and cost allocation are not disclosed, hence netbacks are on an indication basis only. Netback levels are assessed from distributor selling prices minus estimated marketing, margins, handling and freight costs.

Prices have fallen for Group II base oils imported and resold ex tank in the U.A.E. or on a truck-delivered basis in the U.A.E. and Oman – to $1,525/t-$1,575/t for 110N, 150N and 220N and to $1,635/t-$1,685/t for 600N. These grades are sold in local U.A.E. dirhams since the currency is pegged to the U.S. dollar. The highs of the ranges refer to RTW deliveries to buyers in the U.A.E. and northern Oman.

Africa

A large cargo of various base oils is now en route to Durban, having loaded from Rotterdam and Fawley, U.K. It is expected to arrive Jan. 4, a little later than first heard, but weather may have affected its rate of progress. In addition to base oils, the cargo is said to include easy chemicals, which may be polyalphaolefins or esters.

The naira’s exchange rate is now an important element of base oil trading in Nigeria. The rate has fallen and is volatile, changing sometimes on an hourly basis, which creates risk for traders trying to account in dollars for a large cargo. Accruing dollars can take weeks or months. The rate was 1,709 naira to the dollar Monday, 40 naira lower than a week ago.

Russian base oils in tank In Apapa continue to dictate the going rate for prices in Nigeria. Russian prices have become the standard that imports from other locations, such as the U.S., are expected to compete with. Traders are also being asked for extended credit and flexible payment options in dollars or naira. There are often two or three receivers involved in taking a large cargo of 15,000-18,000 tons, which complicates payments and conversion to dollars.

In times past, the procedure was to obtain a letter of credit opened by a local bank in Nigeria and subsequently confirmed by a first class European bank. Payment was made thirty days after the date of bill of lading. The only items not covered under the letter were demurrage and detention, either of which could cost a trader the margin on a cargo.

The vessel FPMC 35, which loaded ship-to-ship at Hamriyah anchorage in the U.A.E., has now arrived in Lagos and is assumed to be discharging its 15,000-ton cargo.

Imports from the U.S. or Europe will have to compete with prices for Russian base oils but may carry a premium based on quality.

CFR values in Apapa could be around $1,055/t-$1,085/t for SN150, $1,100/t-$1,120/t for SN500 and $1,145/t-$1,170/t for SN900. Prices for Russian barrels imported from Russia or the U.A.E. are still indicated around $995/t for SN150, $1,035/t for SN500 and $1,085/t for SN900.