Meanwhile, geopolitical tensions abound. The U.S. and Iran are discussing a potential curb on the latter country’s nuclear program with an airstrike threat by the former looming. The war in Ukraine rages on, and Israel has resumed attacks on Hamas in Gaza.

Stock markets around the world have started to recover from a brutal battering last week, but the U.S. dollar is being trashed by the tariffs policy and continues to weaken against most major global currencies. Energy prices have seen steep declines followed by moderate recoveries, but crude oil and gas prices remain at much lower levels than seen previously.

Crude and feedstock prices appear to have gravitated to new norms as prices remained steady the past week. Current prices are disincentivizing oil exploration and development in the U.S. and elsewhere.

Prices for dated deliveries of Brent crude were quoted at $64.30 per barrel Monday, for June front month settlement, almost in line with one week ago. West Texas Intermediate levels also steadied, coming in at $60.90/bbl, still for May front month.

European low-sulfur gasoil prices have crashed and dropped below the $600 per metric ton barrier before rising to $607/t late Monday, now for May front month. All of these prices were obtained from London ICE trading late April 14.

Europe

API Group I and II barge shipments on the Rhine River continue to be affected by low water levels after weeks without significant rainfall. The low water levels affect draft on the river limiting river transportation of base oils, which now have to be delivered by truck – a much more expensive option.

Confusion remains over the tariffs and when they will be imposed on the European Union since a 90-day reprieve has kicked in and is now running down. The EU and other European countries have held back in applying retaliatory tariffs on U.S. goods, but Brussels is preparing contingency measures should the tariffs be reinstated.

From a base oil standpoint, the effect of a 25% tariff being applied to all cars and vehicle parts entering the U.S. will have a detrimental effect on factory fills, which forms a significant part of the automotive lubricant market. In conversations last week, many blenders expressed great concern regarding future requirements for large car manufacturers, with luxury marques such as BMW, Audi/VW and Mercedes being in line for big production cutbacks.

Group I base oil prices within European markets have not changed much the past week, although some buyers noted that distillate prices have fallen substantially the past two weeks, padding premiums for base oils.

With the European Group I market relatively snug, there has been no revival of an export market. Most of the traditional export markets such as West Africa, are at tank tops right now following large cargoes from alternative sources such as the U.S., with a second-tier market being supplied with Russian barrels from traders involved in markets such as Nigeria.

It was reported last week that a Group I cargo was being considered from Brazil, but that rumor was denied by two traders questioned by your columnist. The idea of such a shipment was described as a pipe dream. Another trader suggested that only naphthenic base oils are available for export from Brazil right now, and these would not suit the European market.

Higher European prices continue to attract imports. Some buyers are looking for alternative suppliers because traditional sources are short of availabilities or do not have the full slate of Group I oils available. Also, scheduled temporary shutdowns for maintenance are approaching for a number of the region’s Group I refineries, and these may limit availabilities.

Prior to the U.S. tariffs demand was increasing, but now the economic outlook is quite different, and buyers are rethinking plans to replenish base oil inventories with large purchases.

European prices for Group I base oils are steady, but falling feedstock values could create downward base oil pricing pressure. FCA Rotterdam numbers are offered at $930/t (€820) for solvent neutral 150, $1,000/t (€880) for SN500 and $1,450/t (€1,280) for bright stock.

Pan-European euro prices relative to the whole Group I market remain between €860/t and €895/t for SN150, €925/t-€965/t for SN500 or SN600 and €1,355/t-€1,425/t for bright stock depending on quantity purchased and availability.

Often certain producers and resellers will sell only in dollars due to cost allocation structures in place, reflecting crude feedstock prices which are accounted for in dollars.

The euro’s exchange rate to the U.S. dollar strengthened to $1.1361 Monday.

With potentially lower European demand and lower feedstock prices, prices for Group II oils are also come under downward pressure the past couple weeks. This perceived pressure stems partly from U.S. tariffs on key industries such as automobile manufacturing and steel production, which could limit demand for premium base oils just as demand was gaining momentum.

Group II demand was said to be increasing around Europe, though some blenders in Europe were also considering replacing some Group I usage with lower-viscosity Group III grades, which currently cost less than Group II oils.

European Group II prices are trimmed this week, now assessed at €1,100/t-€1,125/t for 110 neutral and 150N, at €1,145/t-€1,175/t for 220N and €1,170/t-€1,220/t for 600N. These values apply to a wide range of Group II oils from Europe, the U.S., the Red Sea and Asia-Pacific. Prices for imports pertain to bulk imports, but smaller quantities are bought directly by finished lube blenders and transported to them in flexi-tanks.

Group III base oil prices around Europe have stabilized and are now face little downward pressure. European supply may even hae tightened due to a lack of barrels from one Middle East Gulf source and its appointed distributor in Europe. Others suppliers from the Middle East and Malaysia remain active, but shipments of gas-to-liquids base oil from Qatar have decreased, with most of that supply going into India and the U.S.

Overall, the supply scene is shifting to a more balanced market, though demand may be starting to quiver as a result of tariff impositions on key industries.

The oversupply situation of last year’s fourth quarter has not returned. Due to maintenance programs and producers stockpiling material, the number of cargoes arriving from Asia-Pacific and the Middle East Gulf has dipped.

Prices heard in offers for 4 centiStoke material were around $1,065/t (€938/t). A supplier previoiusly offering 4 centiStoke material with partial slates of finished lubricant approvals at exceptionally low rates is no longer doing so, having come up to €1,055/t. Other sellers are at €1,075/t-€1,100/t for 4 and 6 cSt oils, on an FCA basis ex Antwerp-Rotterdam-Amsterdam.

European and United Kingdom prices for partly-approved Group III are in a wide range of €938/t-€1100/t for 4 and 6 cSt and €1,065/t-€1,100/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Prices for rerefined Group III grades are slightly higher this week at €955/t-€985/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Prices for fully-approved Group III 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, on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain.

Baltic and Black Seas

Estimated FOB prices out of St. Petersburg are put at around $510/t, prices, guesstimated on a netback basis using prices landed into Gebze, Turkey, and typical freight rates and margins for sellers and receivers. FOB prices would yield levels around $450/t on an ex refinery gate basis.

Levels are very low in comparison to European Group I levels, but it is assumed that Russian refineries have their own cost allocation processes. Taking low-priced Urals crude, plus low cost labor and refinery operations, refining units could produce Russian base oil prices which would still give positive contributions.

FOB prices ex St. Petersburg for the two main Russian grades are estimated at around $495/t-$520/t for SN150, $500/t-$530/t for SN500 and around $565/t for SN900 made using Russian bright stock or SN1200 as a high-viscosity blend agent.

Prices for FOB Russian export barrels are published as indications only, since no reliable primary information can be accessed by this report. Attempts to contact sellers have not been successful, whilst in the past, prior to Western sanctions, pricing information and data was freely discussed.

Russian base oils continue to be used by lubricant blenders in Ukraine, who also use additives of Russian origin. Many of the existing blending operations in the eastern oblasts have disappeared or have moved to sites further west. Some of these long time blending operations have ceased, for example in Mariupol, where there were three blenders prior to the Russian invasion.

All the transactions, negotiations and deliveries are expedited through traders or distributors based outside Ukraine. How payments are made is not known since Russian banks have no access to the Swift international payment system, meaning Ukraine banks could not transfer funds to Russian banks. Foreign banks in Turkey and Ukraine would also be unable to use the Swift system to transfer funds to Russian banks.

Turkish traders continue to offer blends of Russian and Uzbek SN150 at $745/t and SN500 at $765/t. A quantity of SN900 which is part of an inquiry was priced much higher at $1,045/t, probably because it contains bright stock sourced from an EU seller or from Luberef’s refinery in Yanbu, Saudi Arabia. 

Domestic prices for Group I base oils produced at the refinery in Izmir are unchanged at 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. Prices are ex rack at the refinery and incur an additional standard loading charge of Tl 8,199.20/t.

Group II ex works prices from a Turkish blender are being offered at $865/t for 110N and 220N and $1110/t for 350N. Higher grade Group II from Taiwan is offered at $1,500/t for 500N and $1,150/t for 150N.

Group II base oils have been imported to Turkey from the Red Sea, the U.S., South Korea, Taiwan and Russia, but how many of these sources are still active is unknown due to shipping and logistical problems in the Red Sea.

Group III 4 cSt from Tatneft in Russia is offered at €975/t, while other partly approved Group III grades are priced higher, at €1,095/t-€1,155/t. U.S. dollar prices are also available.

Some base oils have been bridged into Turkey from cargoes that originally discharged in Antwerp-Rotterdam-Amsterdam then traveled to Turkey in flexies.

Fully-approved Group III grades ex Cartagena, Spain, are delivered into Gemlik, Turkey, and sold there on an FCA basis.

Middle East

With all holidays now past, base oil cargoes coming out of Yanbu and Jeddah, Saudi Arabia, have returned to their normal pace. Group I and Group II are currently moving from Yanbu and Jeddah to Europe, Egypt and Turkey in addition to the UAE and Mumbai anchorage.

A cargo of 4,000 tons for receivers in Aqaba, Jordan, is ready to load and subject to shipping this cargo will sail in the next couple of weeks.

U.S. tariffs of 10% have been suspended for 90 days for Middle East countries, although not many instances of goods produced in Middle East Gulf follow a trading pattern into the U.S. The exception is Group III base oils from the UAE, Bahrain and Qatar, which are are exempted, so trade will proceed as normal with cargoes of these oils moving into distributors and resellers along the U.S. Gulf of Mexico coast.

Holidays are over and business is getting back to normal in countries such as the UAE and other Gulf Cooperation Council states. A few small cargoes have moved out of Bandar-e Emam Khomeyni, which are allocated to Sepahan Oil as exporters. Rubber process oil continues to come out of Iran destined for India and South Korea.

The latest FOB prices for Sephan Oil are heard at around $895/t for premium SN500 and $880/t for SN150, ex BIK. These cargoes are moving to the UAE and India.

Prices for imported Group I material discharging in the UAE have been confirmed the past week at $935/t-$950 for SN150, $985/t-$1,010/t for SN500 and $1,375/t-$1,400/t for bright stock, all on a CIF or CFR basis ex Hamriyah, Fujairah and Jebel Ali ports.

Smaller cargoes of Group I base oils have loaded from Thailand and are expected to arrive into Hamriyah in the next couple of weeks. The first cargo arrival from Thailand is confirmed following the completion of a turnaround at refinery in Sriracha.

Russian base oils still move into Hamriyah port, but there has been no news of another cargo to be loaded from one ship to another and then routed to Nigeria.

Prices for Russian base oils are estimated to be around $785/t for SN150 and $795/t for SN500, both on a CFR basis ex Hamriyah port. These prices apply to material being discharged into storage tanks.

Group III cargoes are loading out of Al Ruwais, UAE, and Ras Laffan, Qatar, bound for India, Europe, and the U.S., with no indication that the maintenance at Sitra refinery in Bahrain has been completed. Inquiries will be made this week to see if the 45-day turnaround has finished.

Estimates of netbacks for Group III base oils from Al Ruwais are unchanged at $1,090/t-$1,120/t for 4, 6 and 8 cSt grades. These numbers will indicate FOB levels from Adnoc to their distributors in Europe and the U.S. Distributors charter vessels and load cargoes for their respective destinations and are responsible only for purchasing on an FOB basis. The same practice is adopted in Bahrain, although Bapco does sell CIF cargoes directly to buyers in India and China.

Netbacks for gas-to-liquids Group III+ base oils loading ex Ras Laffan, Qatar, are assumed to be higher – around $1,155/t-$1,220/t. Shell’s cargo economics and cost allocation are not disclosed. FOB netback levels are estimated from distributor selling prices in various markets minus estimated marketing costs, margins, handling, storage and freight.

Group II base oils are playing a more influential role in the UAE and are regularly imported from the Red Sea, the U.S., Europe, South Korea and Singapore. These are either resold ex tank in the UAE or on a truck-delivered basis in the UAE and Oman. Some larger buyers have their own storage where they take cargo or partial-cargo quantities for their own in-house blending.

Prices are unchanged at $1,455/t-$1,500/t for 110N, 150N and 220N, with 600N at $1,535/t-$1,575/t, all on an FCA basis. The high ends of the ranges apply to RTW deliveries to buyers in the UAE and northern Oman. Sales are conducted in UAE dirhams, which are pegged to the U.S. dollar. The current exchange rate is AED 3.67.

Africa

Greek sellers have offered a 3,500 tons cargo of Group I neutrals to Turkish buyers, who are considering the options to take European specification base oils rather than use Russian grades in blends.

The large cargo for South Africa is assumed to have loaded in Rotterdam and is proceeding to Fawley for topping off and additional Group III grades. The cargo is believed to be around 19,000 tons of a combination of types and grades of base oils, and a small quantity of easy chems which may be PAOs. The cargo will sail to South Africa and discharge in Durban in May, or early June.

The ExxonMobil cargo for the three ports in West Africa is believed to be on the high seas having loaded in fowler around two weeks ago. The ports of call will be Conakry, Guinea, then Abidjan in Cote d’Ivoire, and finally 5,000 tons of three Group I grades, SN150, SN500 and bright stock in Tema, Ghana.

Nigeria is completely stocked with high specification base oils which came in from U.S. Gulf Coast and USAC sources. There will be no need for further cargoes moving into Apapa fo the next couple of months. With large quantities of base oils in tank. Blenders involved in toll blending for branded lubricants are keen to purchase U.S. material, but are unhappy with the ex tank prices being offered. These blenders are not keen to take Russian products due to lower quality/specification, and sometimes the time some of the oils have been in tank.

SN150, SN500 and SN900 is still considered to be the best combination of grades to form a cargo, with two cargoes totalling around 28,000 tons arriving in Apapa over the last six weeks. The cargoes would have comprised of large quantities of SN900, perhaps as much as 15,000 tons. 

Some buyers in Nigeria continue to object re paying ‘higher’ prices for quantities of U.S. sourced SN900. they say they may only take SN150 and SN500 in future, using SN500 as the highest viscosity grade.

Russian base oils from Baltic and Egypt are offered from two traders, both containing extremely low prices.

The current exchange rate for naira to dollars is quoted at 1624 NGN to 1 USD, higher by around 50 NGN than last week’s exchange rate. This is the official rate issued by the CBN.

CFR Apapa prices for U.S. sourced material are confirmed and without any further cargoes arriving are maintained between $965/t-$980/t in respect of SN150, $990/t-$1,010/t for SN500, with SN900 at $1,080/t.

Prices for Russian base oils imported from Russia or Egypt are indicated at $895/t for SN150, $910/t for SN500 and SN900 at $985/t, all basis CFR Apapa.

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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