It is worth noting that the European Union still can impose an import duty on Group II base stocks which are arriving from countries without free trade agreements. This of course includes the U.S., home to refiners such as Chevron, Motiva and Phillips 66, which at least occasionally ship Group II oils to Europe. Those cargoes could be subject to a 3.7% levy when discharging into EU ports, although this tax has been temporarily suspended for imports arriving from U.S.

Europe already has multiple Group III producers and is scheduled to gain another in 2027, when Shell opens a plant in Germany. Some European rerefiners also make Group III oils and could likewise target U.S. markets if such business continues to avoid tariffs.

The markets are full of unknowns at this stage, with the fallout from last week’s news taking time to filter down to grassroots level. The global tariffs range from 10% at the lowest to 49% applying to Cambodian imports. With Vietnam not far behind at 48%, these imports will possibly cover items such as furniture and foodstuffs in the main.

The EU faces a 20% general tariff that could affect large swathes of industry, but a 25% duty being applied to all vehicle imports could hit European suppliers particularly hard, especially luxury models since they carry the highest prices. German original equipment manufacturers such as Mercedes, BMW and Audi/VW are all taking stock as are Nissan, Renault, Citroen and Alfa Romeo. United Kingdom-based Jaguar Land Rover already announced a temporary halt on exports to the U.S.

Retaliatory tariffs have been issued speedily from some countries such as China, with whom the U.S. is falling into a full-blown trade war. Other nations are biding time to see if negotiations can gain exemptions or at least reductions in the tariffs levied so far.

The full implications of the tariffs have not yet been assessed, since there are numerous supply chains in place – many of which have not been considered. U.S. distributors and importers of foreign goods are having to reassess their business plans and direction for the future.

Many are commenting that the tariffs will pitch the U.S. into recession, with inflationary pressures arising where imports which cannot be avoided. Materials such as steel and aluminum play important roles in sectors such as aviation and scientific instrumentation construction, with specialist materials which cannot be simply substituted from domestic U.S. production.

The lack of U.S. tariffs  on base oils clears the way for Group III producers to concentrate on an expanding market in the U.S., which currently produces relatively small amounts of the grade. Chevron has undertaken a project to add Group III production to its refinery in Pascagoula, Mississippi, which could reduce reliance on imported material from the Middle East Gulf and Asia-Pacific.

Apart from the calamitous effects that the tariff announcement had on stock markets around the world, energy prices have also taken a huge hit, with crude and feedstock prices falling steeply. Crude oil slid more than 15% in a matter of days, and low-sulfur gasoil fell $70 to just above $600 per metric ton. These crude moves are perhaps just a starter since OPEC+ members plan to ramp up crude production over the next few months.

Dated deliveries of Brent crude were at $64.15 per barrel Monday, for June front month settlement, down around $10 from the previous week. West Texas Intermediate tumbled to $60.55/bbl still for May front month.

European low-sulfur gasoil prices had risen before the tariff announcements but subsequently fell to $608/t, still for April front month. All of these prices were obtained from London ICE trading late April 7.

Europe

Group I and Group II barge shipments are being affected by low water levels on the Rhine, which are limiting river-borne deliveries and in some cases forcing use of trucks.

The Group I scene in Europe has not materially changed since last week. There still is no real export market, and it would be difficult for producers in the region to serve traditional export markets such as West Africa, where much of the slack has been taken up by alternative supplies from the U.S. and Russia.

Other West African markets like Cote d’Ivoire, Guinea and Ghana are being covered by Group I supplies from ExxonMobil, mostly from its refinery in Fawley, U.K.

Imports are making their way into European hubs from the U.S. and the Red Sea, and a cargo from Brazil was recently announced. In years gone by, Petrobras supplied many cargoes of Group I base oils into Europe, but that trade fell off in recent years. 

Higher European prices are attracting imports, and the absence of import duties has the market primed for new suppliers since many traditional sources are either short of availabilities or do not have the full slate of Group I base oils available. For example, many refiners no longer produce large quantities of bright stock, a grade in great demand the past few months.

A number of refineries around Europe are beginning temporary shutdowns for maintenance, and these procedures will take their toll on base oil availability. This should further boost demand for imports.

Distillate prices have decreased following the U.S. tariff announcement, and it will be interesting to see if base oil suppliers received pressure to cut values in order to preserve that delta.

Group I demand was increasing, but considering the abrupt shift in the economic outlook around Europe, many buyers have put a hold on purchasing plans.

European prices for Group I base oils are currently stable, but the decline in feedstock prices could generate downward pressure. More information and data will come to light over the next few weeks as the impacts of the economic shocks materialize and as the situation develops.

For the moment, FCA offered prices from Antwerp-Rotterdam-Amsterdam are unchanged at $930/t (€860/t) for solvent neutral 150, around $1,000/t (€925/t) for SN500 and $1,450/t (€1,345/t) for bright stock. These levels are taken from imported material being resold ex-tank in Rotterdam.

Pan European prices are left in the same ranges of between €860/t and €895/t for SN150, €925/t-€965/t for SN500 and SN600 and €1,355/t-€1,425/t for bright stock, depending on quantity being purchased and availability.

The euro’s exchange rate with the U.S. dollar was up to $1.09078 Monday.

There was speculation in the European market last week that prices for Group II oils might rise, but that has turned to questions of whether they will weaken as energy prices drop. Group II demand was increasing around Europe, though some blenders in in the region were considering options to shift to Group III grades with partial slates of finished lubricant approvals, which currently are priced less than Group II.

European Group II prices are unchanged at €1,120/t-€1,145/t for 110 neutral and 150N, €1,165/t-€1,190/t for 220N and €1,195/t-€1,240/t for 600N. These prices apply to a wide range of Group II oils from Europe, the U.S., the Red Sea and Asia-Pacific. For imports the ranges refer to bulk shipments, but smaller quantities are bought directly by finished lubricant blenders and transported in flexi-tanks.

Last week Group III base oil prices around Europe were stabilizing, but where the market goes right now is anyone’s guess. As mentioned above, some finished lube blenders are trying out replacing Group II oils with Group III, but this trend may be relatively short lived if Group II prices fall in relation to Group III.

Group III availabilities in Europe are no longer at a peak reached when an oversupply developed during the fourth quarter of last year. Since then maintenance shutdowns and the building of inventories that usually occurs before them, the number of cargoes arriving from Asia-Pacific and the Middle East Gulf dipped.

Prices heard in offers for 4 centiStoke material were around $1,045/t (€969/t). One distributor is offering 4 cSt with a partial slate of approvals for €1,025/t, whilst others are maintaining prices at €1,065/t-€1,090/t for 4 and 6 cSt, on an FCA basis ex Antwerp-Rotterdam-Amsterdam.

Pan-European and U.K. prices for Group III oils with partial approvals remain in a wide range of €945/t-€1,090/t for 4 and 6 cSt and €1,045/t-€1,100/t for 8 cSt, on an FCA basis ex Antwerp-Rotterdam-Amsterdam or Northwestern Europe.

Prices for rerefined Group III grades are unchanged at €935/t-€970/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Rates for Group III oils with full slates of approvals are unchanged at €1,625/t-€1,695/t for 4 and 6 cSt and at €1,720/t-€1,745/t for 8 cSt, all on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain.

Baltic and Black Seas

This week’s estimated FOB prices loading out of St. Petersburg are around $510/t, calculated on a netback basis using prices landed into Gebze, Turkey, and typical freight rates and margins for sellers and receivers. These prices would yield levels around $450/t on an ex refinery gate basis.

These levels are incredibly low compared to European Group I rates, and it can only be assumed that Russian refiners have their own cost allocation methods. Low-priced Urals crude, and low cost refinery operations could yield numbers such as these while still enabling some profit.

FOB prices ex St. Petersburg are guesstimated at around $495/t-$520/t for SN150, $500/t-$530/t for SN500 and around $565/t for SN900 blended specifically for the Nigerian market using Russian bright stock or SN1200 as a blend constituent. Prices for FOB Russian export barrels are published as indication prices only, since no reliable information can be accessed to file in this report.

Lube blenders in Ukraine continue to use Russian base oils to blend finished lubricants by blenders in Ukraine. Additives also of Russian origin are utilized by blenders around Ukraine, but many blending operations in the eastern territories have disappeared or have moved operations westward.

Payment parameters are not clear. Russia is supposed to have no access to the Swift international payment system, which would make bank transfers impossible between. Foreign banks in Turkey and Ukraine would also be unable to use the Swift system to transfer funds to Russian banks. Russian President Vladimir has pushed to have Russia regain access to the Swift payment system.

Turkish traders are offering blends of Russian and Uzbek base oils at $765/t for SN150 and $780/t for SN500. A quantity of SN900 was part of an inquiry, but this grade was priced much higher, at $1,045/t, because it would include bright stock sourced either from an EU seller or from Luberef’s refinery in Yanbu, Saudi Arabia.

The Tupras refinery in Izmir, Turkey has resumed production of Group I base oils, but prices have been hiked too high for local buyers to afford. Those prices are 42,577 lira/t for spindle oil: Tl 33,552/t for SN150; Tl 38,640/t for SN500; and -Tl 54,874/t for bright stock. These levels are ex rack at the Izmir refinery and incur an addition loading charge of Tl 8,199.20/t.

A Turkish trader is offering Group II oils at $880/t for 110N and 220N and $1,100/t for 350N. A gap that large suggests the lighter grades are from Russia. Group II oils from Taiwan are offered at $1,500/t for 500N and $1,150/t for 150N. How these quantities arrived into Gebze is not known, but perhaps they were shipped on a Chinese-flagged ship, providing safe passage from Houthi militants through the Bab-al-Mandeb Strait.

The market in Turkey also features Group II base oils imported from the Red Sea, the U.S. and South Korea.

Group III 4 cSt oil from Tatneft in Russia is being offered at €975/t, while other Group III oils with partial approvals are priced at €1,095/t-€1,155/t. Dollar equivalent prices are also available.

Some grades have been bridged into Turkey from cargoes discharged in Antwerp-Rotterdam-Amsterdam. These are often transported to Turkey in flexies.

Group III oils with full approvals are being delivered from Cartagena, Spain, into Gemlik, where prices are estimated at €1,825/t-€1,855/t on an FCA basis.

Middle East

Following the few days of the Eid-al-Fitr holiday last week, players have been returning to offices, and normal trading hours has resumed in Islamic countries throughout the Middle East and beyond.

Cargoes of Group I and II base oils are shipping from Yanbu and Jeddah, Saudi Arabia, to a number of destinations, including Europe, Egypt and Turkey.

Sudanese receivers will take delivery of a large parcel of around 7,000 tons of Group I grades. A cargo of 4,000 tons is planned for Aqaba, Jordan. The usual cargoes are also loading for Mumbai anchorage and the United Arab Emirates.

Houthi militants continue to attack selected ships in the southern Red Sea, and media reports suggest the U.S. plans to bomb command centers in an attempt to halt the attacks.

No movements have been reported of base oil exports from Sepahan Oil in Iran, suggesting that a greater quantity than normal of rubber process oil was delivered to the West Coast of India during March. The quantity is heard to be around 6,000 tons in total – more than the normal quantities of around 2,000-2,500 tons.

The latest FOB prices heard toward the end of March were around $880/t for premium SN500 and $865/t for SN150 ex Bandar-e Emam Khomeyni. Exports are moving to the UAE and India.

Receivers in Muscat, Oman, are taking base oil cargoes from Sepahan, when material is available. Base oils are transported by road tanker or in flexies in containers into Yemen, providing raw materials for finished lubricants.

New prices for Group I material imported to the UAE were confirmed last week: $925/t-$940/t for SN150, $970/t-$995/t for SN500 and $1,355/t-$1,385/t for bright stock, all on a CIF or CFR basis ex Hamriyah, Fujairah and Jebel Ali ports. The ranges account for various differences in calling costs at the different ports.

Smaller cargoes of Group I base oils will be loading from Thailand and Indonesia, although dates for the first cargo arrival from Thailand are not confirmed. A maintenance turnaround is currently underway at the refinery in Sriracha, Thailand.

Russian base oils are moving into Hamriyah port, but there is no news of another ship-to-ship cargo to then sail on different vessel to Lagos.

Prices for Russian base oils discharged into Hamriyah port are estimated to be around $785/t for SN150 and $795/t for SN500, on a CFR basis.

Group III cargoes continue to load from Al Ruwais, UAE, and Ras Laffan, Qatar, bound for India, Europe, the U.S. and China, but shipments from Sitra, Bahrain, have slowed due to maintenance that will be completed in a couple of weeks. During January and February, record quantities of gas-to-liquids Group III+ were shipped from Ras Laffan to receivers in Indian ports.

Netbacks for Group III base oils from Al Ruwais are raised slightly, indicated at $1,090/t-$1,120/t for 4, 6 and 8 cSt grades. These figures will provide indications for FOB levels from Adnoc to their distributors in Europe and the U.S.

Netbacks oils loading ex Ras Laffan are assumed to be higher, at $1,155/t-$1,220/t. Cargo economics and cost allocation for supplier Shell are not disclosed. FOB netback levels are assessed from distributor selling prices in various markets minus estimated marketing costs, margins, handling, storage and freight.

Group II base oils are playing a bigger role in the UAE market and are being regularly imported from the Red Sea, the U.S., Europe, South Korea and Singapore. These oils are resold ex tank in the UAE or on a truck-delivered basis in the UAE or Oman. FCA ex-rack prices are unchanged at $1,455/t-$1,500/t for 110N, 150N and 220N and at $1,535/t-$1,575/t for 600N.

The highs of the ranges refer to RTW deliveries to buyers in locations in the UAE and northern Oman. Sales are conducted in dirhams, which the government pegs to the U.S. dollar. The current exchange rate is AED 3.67.

Africa

Smaller cargoes from Spain continue to move across the Mediterranean to receivers in Morocco and Egypt. Luberef is also delivering a cargo of bright stock from Yanbu to Alexandria to service the EGPC tender.

Another large cargo for South Africa will load on a relatively prompt basis from Rotterdam and Fawley with around 19,000 tons of various types of base oils and a small quantity of easy chemicals, possibly polyalphaolefins. This cargo will discharge in Durban during May.

A cargo of around 9,000 tons has loaded ex Fawley for three ports in West Africa. The first discharge will be Conakry, Guinea, then Abidjan in Cote d’Ivoire, and finally 5,000 tons of SN150, SN500 and bright stock will go into Tema, Ghana.

In Nigeria there are large quantities of base oils in tank, and it is not anticipated that further large cargoes will be necessary for some months to come. Top line blenders are keen to purchase U.S. barrels but not keen to take Russian products due to quality or specification and the length of time some of the oils have been sitting in tank.

SN150, SN500 and SN900 are still considered the best combination of grades to form a cargo. Such a cargo arrived two weeks back in Lagos’ Apapa port, arranged by a trader and including a large quantity of SN900 made by blending U.S. bright stock with a lighter Group I grade. This approach is still preferable to blending Russian SN500 or SN150 with SN1200 or Russian bright stock.

Buyers in Nigeria are objecting, though, to higher prices for SN900. At least some say they may only take SN150 and SN500 in the future, using the latter as the high-viscosity grade.

Russian base oils imported from the Baltic and Egypt are offered by a few traders, all with extremely low prices.

The current exchange rate for the local naira to the dollar is quoted at NGN 1,573, around NGN 50 higher than last week.

Prices in Nigeria for U.S. sourced material are unchanged at $965/t-$980/t for SN150, $990/t-$1,010/t for SN500 and around $1,080/t for SN900, all on a CFR basis ex Apapa. Prices for Russian Group I oils are being indicated at $895/t for SN150, $910/t for SN500 and $985/t for SN900, on the same basis.

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.

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