Recent geopolitical events – such as Israeli air strikes against Houthi rebels in Yemen – do not appear to have had much impact on crude oil markets, which were quiet and saw prices rise slightly last week, pushing petroleum products to do likewise. Dated deliveries of Brent crude firmed by around $1.50 over last week’s number, reaching $73.55 per barrel Monday, still for February front month settlement. West Texas Intermediate climbed $3 to $71.30/bbl, also for February front month, narrowing the crack between the two benchmarks.

Low-sulfur gasoil burst out from the narrow range in which it had hovered, increasing $25 to $695 per metric ton, still for January front month. All of these prices were taken from London ICE late Dec. 30.

Europe

The market for API Group I exports from Europe remains dull or non-existent, with most producers not having enough excess output to assemble quantities worthy of export sales. Also, prices remain higher in Europe than in alternative markets. Europe did not have year-end clearance sales this year, although availabilities of Group I solvent neutrals are reasonable, with only bright stock remaining somewhat tight.

The scant amount of activity or inquiries around markets lately offers no indication of this situation changing. There have been some small cargoes moving in the Mediterranean to North African receivers in Egypt and Morocco, but these are contracted, routine deliveries of Group I base stocks that cannot be regarded as true export sales. These trades are conducted directly between producers and receivers.

Group I trade within Europe has been slow during the holiday period. Buyers remain convinced that the markets will stay steady with little movement over the next few weeks. Availabilities are more than sufficient to cover new requirements in January. Finished lube blenders depending on the Rhine River for base oil deliveries seem to have covered themselves against rising water levels in January and February, which could prevent barges from passing low bridges.

Bright stock remains firm due to limited availability, but prior to Christmas sources commented that they were able to secure sufficient quantities of this grade for January delivery.

European prices for Group I oils are unchanged in a range between €885/t and €910/t for solvent neutral 150, €920/t-€955/t for SN500 and €1,200/t-€1,255/t for bright stock, all on an FCA basis. The euro’s exchange rate with the United States dollar moved to $1.03825 Monday. The average price differential, across all grades, between Group I sales within the Europe and hypothetical exports is unchanged at €5/t-€15.

There is likewise little news from Europe’s Group II sector, but prices for those oils are also presumed to have remained steady. Buyers are missing from their desks until next week at the earliest. Sellers are also notable by their absence, so almost no one was attempting to arrange sales during the holiday period.

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 some produced in Europe plus imports shipped in bulk from the U.S., the Red Sea, and Asia-Pacific. Smaller quantities of imports are transported in flexi-tanks, and pricing for them can be radically different.

European Group III markets are marking time for now as a great deal of material sits in tanks around Europe. More supplies are reported to be on the water from Middle East Gulf sources. Demand has been dull the past few weeks, but there are positive signs that January may bring an uplift in demand due to changes in many formulations that will require more use of Group III oils.

For now demand remains weak across the main European markets in Germany, the Benelux countries, France and the United Kingdom. One seller of Group III oils with partial slates of finished lubricant approvals was heard offering a 4 centiStoke for €1,125/t, whilst others are maintaining higher prices of €1,185/t-€1,225/t for 4 and 6 cSt, on an FCA basis ex Antwerp-Rotterdam-Amsterdam. Overall then, prices within the region for Group III grades with partial slates of approvals are at €1,125/t-€1,225/t for 4 and 6 cSt and at €1,195/t-€1,225/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam or Northwestern Europe.

Prices for rerefined Group III grades are unchanged at €1,135/t-€1,175/t for 4 and 6 cSt, basis FCA ex Germany.

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

Baltic and Black Seas

Russian export prices appear to have been realigned to ensure that these grades are competitive into whatever market they are dumped. Gazprom and Rosneft barrels are being sold at very low levels into Turkey and Middle East Gulf markets. Even Indian buyers have been tempted to import Russian base oil despite an uptick in Group I production within the country.

Lukoil barrels appear to be higher priced, though it is not clear why. Exports going into Turkey from the Baltic are being resold on an FCA basis ex Gebze, Turkey, at prices around $40/t higher than Rosneft barrels. Lukoil is also offering into Nigeria on a direct basis, whilst a Belarus trader may take up an offer from Gazprom, if payment schedules can be agreed in Lagos.

FOB prices for Group I oils exported from St. Petersburg or Vyborg, Russia, are estimated based on prices offered and  delivered into receivers in Lagos, Singapore and Turkey. Levels are assessed lower than previously assumed at around $650/t-$660/t for SN150, $675/t-$690/t for SN500 and around $725/t for SN900 blended specifically for receivers in Nigeria.

Russian barrels are still being advertized and sold around the Black Sea by a few Turkish traders. Russian barrels are also being bridged from the Black Sea and Turkey to Egyptian ports, stored in tank, and then re-exported to markets such as Nigeria. Cargoes of SN150, SN500 and SN900 are being delivered into Apapa by a trader. How the SN900 is blended is not confirmed, but it is assumed that this grade is blended either in tank or on loading. The grades involved will be SN500 and presumably an SN1200 or something similar.

Prices for Russian SN900 delivered into Nigeria are heard at $1,080/t on a CFR basis. From a Turkish trader Russian and Uzbek SN150 is priced at $790/t and SN500 at $800/t. Considering estimated costs for handling and storage and a margin for the seller, CFR prices for SN150 and SN500 landed into Gebze, Turkey, could be close to $600/t. Rosneft could be the producer.

There has been a recent inquiry to ExxonMobil to supply Group I base oils to Turkish buyers, but for whatever reason this cargo has been declined. The base oil may be too costly, or ExxonMobil may have supply issues in the Mediterranean. The company’s former refinery in Augusta, Italy is now owned by Sonatrach, but there is speculation that ExxonMobil retains drawing rights. The refinery, which makes Group I oils, has been undergoing maintenance.

Tupras’ prices in Turkey for base oils are assumed to be unchanged, although no news has been forthcoming. Prices are 35,285 lira/t for spindle oil; Tl 31,104/t for SN150; Tl 33,253/t for SN500; and Tl 44,962 for bright stock. Prices are in lira ex rack into trucks and incur an addition loading charge of Tl 5,150/t.

Group II prices in Turkey are unchanged at $890/t-$1,100/t for 110N,  220N and 350N, the former two grades priced at the low end of that range, and 350N at the top. Higher spec 500N is offered at $1,500/t, and 150N is available at $1,150/t. The last two grades have been imported from Taiwan, from Formosa Petrochemical. Group II base oils are imported from the Red Sea, the U.S., South Korea, and Taiwan.

The market in Turkey for Group III oils with partial slates of approvals or no approvals includes 4 cSt oil from Tatneft in Russia, which is priced €1,145/t. Other partly-approved grades are priced higher at €1,360/t-€1,400/t. Group III oils with full approvals are being delivered from Cartagena, Spain, into Gemlik, and prices for them are unchanged at €1,960/t-€1,995/t FCA.

Middle East

Cargoes of Group I and II continue to load out of Yanbu and Jeddah, Saudi Arabia, following a slight lull during November. These barrels are competing against U.S. exports put together for receivers in the United Arab Emirates during November and December. Indian buyers have also received cargoes from both regions. Luberef has been supplying Group I and II into the Turkish market, but competition has arisen from imports from Taiwan.

It has been heard that Saudi Aramco, using joint venture subsidiary S-Oil, may look to increase Group I and II exports to Europe. Using the auspices of S-Oil makes perfect sense since that company has been active in the European market with Group II and Group III for many years, and has the infrastructure and experience to market the Saudi production.

A large number of cargoes have been imported into receivers in the U.A.E., including buyers in Fujairah, Sharjah and Dubai accepting cargoes from U.S. sources through a few international traders active in these regions. These shipments are heard to be relatively large quantities of Group I and II that are being sold to third parties. Some, especially the Group II, is also going into appointed distributors.

Group I and II imports from other regions are regularly received into the U.A.E. and neighboring countries such as Kuwait, Bahrain and Qatar. In addition, three Middle East Gulf refineries are vital Group III sources for the global market. All of this traffic has continued during Israel’s war with Hamas and Houthi rebel attacks on shipping in the Red Sea, a remarkable achievement given the disruption to shipping times and costs.

Prices for imported Group I material arriving into Middle East Gulf ports, predominantly the U.A.E., are re-assessed at around $925/t-$945/t for SN150, $965/t-$980/t for SN500 and $1,090/t-$1,120/t for bright stock, all on a CIF or CFR basis ex U.A.E. ports. These prices refer to imports from the U.S., although some lower numbers have been heard for supplies from Thailand and India.

Russian base oil cargoes are arriving into Hamriyah port in the U.A.E., a number having loaded out of Azov ports in the Black Sea, whilst others are being bridged through Limas terminal in Turkey. The trader who delivered the Russian parcel of 15,000 tons, firstly to Hamriyah, and then onwards to Apapa in Lagos, is looking to repeat this exercise some time in the new year, according to buyers in Apapa and U.A.E. sources.

Prices for Russian base oils at Hamriyah port or from ship-to-ship anchorage are heard from U.A.E. sources to start around the mid-$600s on a delivered basis – $645/t-$785/t for SN150 and $655/t-$795/t for SN500. The higher ends of the ranges refer to barrels being discharged into tank in Hamriyah port. These grades could be Rosneft barrels.

The latest tender sale ex Sitra, Bahrain, is reported to be on the water en route to Antwerp-Rotterdam-Amsterdam.

Group III base oil netbacks for material loading from Al Ruwais, U.A.E., and Sitra, Bahrain, for 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 at $1,295/t-$1,325/t – on an indication basis only since the supplier’s cargo economics and cost allocation are not disclosed. Netback levels are assessed from distributor selling prices minus estimated marketing, margins, handling and freight costs.

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

Africa

Durban shipping agency sources have no update on another large base oil cargo that was being considered for a delivery into South Africa and perhaps Kenya during the first three months of this year. The last cargo of mixed base oils is on the high seas, having loaded from Rotterdam and Fawley, U.K. Arrival in Durban is estimated next week.

Sources report that more cargoes being considered for delivery to Nigeria, but U.S. availabilities are said to be decreasing. Russian base oils from the Baltic and Egypt are indicated in current offers and will continue to be difficult to compete against. With future cargoes in mind, the vessel that delivered the 15,000 tons of Russian grades from the U.A.E. to Apapa has ballasted to the U.S. Gulf, presumably to reload. This vessel may be time-chartered to the trader who arranged the previous cargo and may be earmarked to load another parcel out of the gulf. This may be for Nigeria, and with another possible Russian cargo being arranged for Hamriyah anchorage, this vessel may figure yet again, although there are significant distances of ballasting that will incur fuel and crew costs.

The exchange rate of the naira to the U.S. dollar has dropped to 1,565 NGN Monday, down 75 NGN in a week.

Prices in Nigeria for higher specification base oils from the U.S. are confirmed at $985/t-$1,010/t for SN150, $1,040/t-$1,055/t for SN500 and $1,095/t-$1,125/t for SN900, on a CFR basis. However, other traders have offered lower numbers of $940/t for SN150 and $995/t for SN500, while going slightly higher at $1,130/t for SN900.

Russian barrels are being delivered via Turkey and Egypt and are competitive for their quality despite triple handling. Prices in Nigeria for Russian base oils sourced from Egypt and the U.A.E. are indicated at around $980/t for SN150, $995/t for SN500 and $1,080/t for SN900, all on a CFR basis ex Apapa.