In the Middle East Gulf, Israel announced that its military presence in Gaza will be permanent as it seeks prevent a resurgence of Hamas’ influence. Meanwhile, talks between the United States and Iran have yet to yield an agreement over the latter’s nuclear program.

The big news on tariffs the past week was a statement that the U.S. and China had broadly reached a broad accord resolving differences that included the largest tariffs imposed by and against the U.S. Details have yet to be released, but stock markets embraced the announcement.

Global base oil prices are steady, although trends vary between regions. Even within the EMEA area there is divergence, as developments in Europe are radically different from the Middle East Gulf and Africa.

In Europe, API Group I markets remain relatively tight, a situation exacerbated by the power outage experienced Spain and Portugal late last month. Refineries producing base oils in Spain were shuttered due to safety concerns, and although operations have resumed or are in the process of doing so, the unplanned downtime piles on top of production being lost to scheduled maintenance shutdowns this month at four Group I European refineries.

Repsol issued force majeure notices for its base oil plants in Cartagena and Puertollano, Spain. How long those declarations remain in place will depend on how long before production is reset. It is thought that the event could also impinge on Group III output by the Repsol/SK Enmove joint venture in Cartagena.

At this time, no news has been heard from the Cepsa refinery at San Roque, but it’s status is also in question.

U.S. tariffs still hang over the European Union, due to an announced 25% duty on European cars and automotive parts entering U.S. The United Kingdom has been able to negotiate a deal cutting duties on those products to 10% and zeroing out rates for steel and aluminum, but quotas apply and have not been disclosed. Many are extolling the negotiations as a success, but the situation remains worse than prior to the April 2 announcements of the tariffs.

Tariffs are causing negative vibes for base oil buyers, who remain unsure as to what the future will hold. The result is limited purchasing of base oils.

Demand for Group II base oils in Europe seems to be rising, perhaps as a result of tighter availabilities on Group l. In addition, the euro’s exchange rate with the U.S. dollar has risen 5% recently and may have pushed suppliers of imports to raise prices.

Values for Group III grades are also moving higher due to a number of factors. These grades remain lower in cost than Group II base oils, spurring more uptake, whilst at the same time, the European Group III market is seeing less and less material becoming available, with Middle East Gulf turnarounds perhaps having a greater effect than originally anticipated.

Another factor to be considered in Europe is that additive prices are also moving higher, with premium base oil price levels firming these moves were perhaps inevitable.

Crude prices fell last week below $60 per barrel for dated deliveries of Brent crude, then soared on the announcement of the U.S.-China tariff deal, returning to levels seen around one month ago. Given reaction to this news, there could be a resurgence in demand for crude.

Dated deliveries of Brent crude reached $64.80/bbl Monday, for July front month settlement, around $5 higher than last week. West Texas Intermediate also firmed, rising a similar amount to $61.80/bbl, still for June front month.

European low-sulfur gasoil prices fell around $25 during the week to $616 per metric ton, Monday being the last day for May front month. All of these prices were obtained at the close of London ICE trading May 12.

Europe

Uncertainties still rule the roost for many buyers in Europe, with economic results and tariffs still uppermost in players’ minds. Talking with a number of directors of large blending operations in Europe last week, it became plainly obvious that decisions on capital projects, other than necessary routine maintenance and repair expense, will be consigned to the review tray, awaiting clearer views into the future.

Availabilities for Group I grades have tightened and are moving further in that direction due to the supply interruptions in Spain and maintenance shutdowns starting this month. This outlook is very different than a few weeks ago, as buyers in some instances are now struggling to cover prompt requirements.

The tariffs threat remains, but buyers are commenting that they have orders of finished lubricants to fill and that even against the potential of a downward trend in demand, they require quantities of Group I base oils. A number of buyers are saying that they are dealing with two scenarios, one for the present and another in the future.

FCA levels for imported material being resold ex storage in Rotterdam have firmed to around $950/t for solvent neutral 150, around $1,020/t for SN500 and $1,550/t for bright stock, where availability has again tightened.

Pan-European euro prices have gravitated to more definable ranges, but at the same time have consolidated at higher levels than previously seen and heard. SN150 is now between €845/t and €895/t, while SN500 and SN600 are at €895/t-€960/t and bright stock in a wider range of €1,375/t-€1,500/t. Final prices for bright stock depend on quantity purchased, method of delivery and availability.

The euro’s exchange rate with the dollar decreased to $1.11041 Monday.

European demand for Group II base oils had dipped during March and April on the early news on tariffs, but demand has seen a resurgence, with many players looking for extra quantities of Group II. Buyers remain uncertain and are still waiting to see what will happen with U.S. tariffs on EU countries.

European Group II prices have firmed on the back of demand and also due to exchange rate moves. A great deal of Group II base oils sold in Europe are imported from the U.S., and with these imports being accounted back to dollars, suppliers have reacted.

At the same time, crude and feedstock prices that had weakened are now reversing course, and crude could soon approach $80/bbl again.

Prices are reassessed between €1,095/t-€1,135/t for 110 neutral and 150N, while 220N is at €1,155/t-€1,175/t and 600N at €1,175/t-€1,225/t. These values 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 in flexi-tanks.

Group III markets around Europe are firming in price terms as availabilities tighten. A number of coincidental independent factors are at play, suggesting there may be an overall shortage of Group III base oils stocked in European hubs. Shipping delays have impeded replenishment of stocks from the Middle East Gulf and Asia-Pacific, while a turnaround at a Group III plant in Sitra, Bahrain, is apparently limiting availability to a European distributor, who in turn is unable to supply regular buyers around Europe. There are no spot tenders, hence there is considerably less material available.

The European market currently has one supplier of Group III oils with full slates of finished lubricant approvals – the Repsol-SK Enmove joint venture plant in Cartagena. Some expect, however, that Chevron will regain a full slate of approvals for its Nexbase brand base oils produced at the Neste refinery in Porvoo, Finland. Neste plans to convert that site to produce biofuels, at which point it would stop making base oils, but Chevron is upgrading its plant in Pascagoula, Mississippi, United States to make Group III.

S-Oil is also very close to attaining fully-approved status for the Group III oils is produces in South Korea and is expected to do so during 2026.

Group III oils with partial slates of approvals were available in Europe last week and may not be again until replenishment cargoes arrive in Antwerp-Rotterdam-Amsterdam. Prices for 4 centiStoke material have firmed and are now assessed at €1,145/t-€1,175/t, on an FCA basis ex Antwerp-Rotterdam-Amsterdam, with offers for this grade all being made subject to arrival of shipments in Rotterdam or Dordrecht, Netherlands.

European and the United Kingdom prices for partly-approved 6 cSt oils are unchanged in a wide range of €1,155/t-€1,190/t, while 8 cSt is at €1,185/t-€1,200/t, basis FCA ex Antwerp-Rotterdam-Amsterdam or Northwestern Europe.

Prices for fully-approved are again unchanged at €1,625/t-€1,695 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. There does appear to be upward pressure on these prices, probably because of buyers turning to them while unapproved Group III oils are unavailable.

Prices for rerefined Group III grades remain unchanged at €1,025/t-€1,080/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Baltic and Black Seas

Russian base oil prices appear to have risen substantially the past few weeks, perhaps because netbacks they were generating were deemed unacceptable. Export values are now estimated to be around $750/t-$775/t for SN150 and $780/t-$795/t for SN500, on an FOB basis ex St. Petersburg. SN900, which would be blended for Nigerian receivers, would be estimated at around $835/t. These prices are $150/t-$200/t higher than previous calculated from prices delivered into Turkey.

There are fewer Lukoil cargoes moving out of the Baltic to Gebze, Turkey, or Singapore. Turnarounds at a number of Russian refineries including Perm may have affected availabilities from the north. Ukrainian strikes on refineries may also have curbed availabilities, with producers having to move material around Russia to cover domestic demand, which is running high at this time.

Domestic demand may be limiting the number of export cargoes moving out of the Baltic.

Prices for exported Russian base oils still remain lower than those for Group I oils from mainstream Europe, but the sudden 25% price hikes are curious.

Recent reports from Turkey show smaller quantities and fewer cargoes of Russian base oils being delivered into ports such as Gebze. This could imply that domestic supply is prioritized and that exports at previous low prices were a last resort.

A Turkish trader and lube blender who previously offered a Russian-Uzbek blend of SN150 for $745/t is now offering that cut for $865/t and SN500 at $880/t. The price for SN900 rose from $1,045/t to $1,210/t thanks to sharp price hikes for bright stock, which is used to blend that product. These ex-works values are provided on an indication basis.

Russian delivered prices for the Group I grades are now confirmed around $835/t for SN150 and around $850/t for SN500 for Lukoil barrels delivered from the Baltic, basis CIF Turkish ports such as Gebze. Prices for the same grades of Rosneft oils would be around $100/t lower.

The Tupras refinery in Izmir offers Group I base oils, but prices are too high for local buyers who therefore prefer to stick with Russian barrels where possible. Izmir prices 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. These rates are ex rack Izmir refinery and incur a standard loading charge of Tl 8,199.20/t.

Group II ex works offered prices from a Turkish trader are now at $1,065/t for 110N and 220N and at $1,265/t for 350N. The lower viscosity grades may be from Russia. Higher specification Group II – possibly from Taiwan or Yanbu, Saudi Arabia – are offered at $1,645/t for 500N and $1,285/t.

Group III from Tatneft in Russia is now offered at €1,100/t for 4 cSt. Other partly-approved Group III grades are priced higher, at €1,325/t-€1,360/t. Some of these grades have been supplied in flexies from storage in Rotterdam after being transported there in larger cargoes.

Fully-approved Group III grades ex Cartagena, Spain, are delivered into Gemlik where they are priced at €1,825/t-€1,855/t, basis FCA.

Middle East Gulf

Luberef reported a drop in first quarter profit, but its Yanbu Growth II project continues to be paramount to the future of this refinery and is on track to be completed over the next few years. The project is not confined to base oils, involving the whole slate of petroleum products from the site.

Maintenance at Yanbu this year has so far included replacement of the hydrocracker catalyst, with further work scheduled for November this year, completing a five-year cycle of maintenance at the refinery.

The flow of large cargoes to the West Coast of India may start to slow with the onset of the Monsoon season because Saudi Aramco, through affiliate companies such as Motiva and S-Oil, could focus more on higher return markets such as Europe.

Tariffs are not deemed important for Middle East Gulf nations, with the 10% levy imposed by the U.S. largely ignored since few exports from Middle East Gulf countries find their way into U.S. markets. Most of the trade is moving the opposite direction, for example with imported Group I and II base oils arriving into locations such as the United Arab Emirates from traders based in the U.S.

This trade may start to slow, since many of the cargoes are split between the West Coast of India and the U.A.E. Imports to India should subside with the onset of the Monsoon season next month.

Base oils have been exempted from U.S. tariffs, hence imports of Group III material from the Middle East Gulf should continue as normal going into two main distributors. The distributors buy cargoes from Al Ruwais, UAE, and Sitra, Bahrain, on an FOB basis, moving the material into storage along the U.S. Gulf of Mexico from where they are delivered across much of the country. Shell also imports gas-to-liquids Group III from its joint venture in Ras Laffan, Qatar, for use in the Shell system.

Fewer Iranian cargo movements are reported loading out of Bandar-e Emam Khomeyni. Most consist of Group I base oils from Sepahan Oil and are sailing either to the UAE or to the West Coast of India. FOB prices for sales into India. Values were heard at around $895/t for premium SN500 and $865/t for SN150, basis CIF the West Coast of India.

Prices for imported Group I material discharging into the UAE are reconfirmed at $915/t-$930/t for SN150, $940/t-$955/t for SN500 and $1,220/t-$1,265/t for bright stock, CIF or CFR Hamriyah, Fujairah and Jebel Ali ports. The source for Group I material in this case was Rayong in Thailand.

Russian base oils do not appear to be moving into the UAE as before. With the rumors of prices moving upwards, and domestic Russian demand rising, perhaps suppliers are not so keen to discount heavily to dump product into this market. The last Russian base oil prices basis CFR Hamriyah port were heard in March at around $785/t for SN150 and $795/t for SN500, but nothing seems to have discharged since that time.

Group III cargoes are loading out of Al Ruwais, Ras Laffan and now Sitra, bound for India, Europe, the U.S. and Thailand. Netbacks for Group III base oils from Al Ruwais are increased, indicated now at $1,185/t-$1,240/t for 4, 6 and 8 cSt grades.

Netbacks for GTL Group III+ loading ex Ras Laffan are taken higher and are now indicated at $1,255/t-$1,290/t, with cargoes having moved into the U.S., Thailand and Singapore. Shell’s cargo economics and cost allocation are not disclosed, hence these numbers are offered as indications only.

FOB netback levels are assessed from distributor selling prices in various markets minus estimated marketing costs, margins, handling, storage and freight.

Group II premium base oils are in demand in the UAE, with suppliers almost queueing to supply into what is seen as a fast growing market. These base oils are imported from the Red Sea, the U.S., South Korea, Europe and Singapore and are either resold ex tank in the UAE, or sold on a truck-delivered basis in the UAE and Oman.

FCA prices are unchanged at $1,425/t-$1,475/t for 110N, 150N and 220N and at $1,510/t-$1,555/t for 600N. Sales are often conducted in UAE dirhams, which are pegged to the U.S. dollar. The current exchange rate is AED 3.67. The highs of the ranges refer to RTW deliveries to buyers in locations in the UAE and northern Oman.

Group III base oils from Al Ruwais and Sitra are delivered into the UAE either in small vessels or from Abu Dhabi by road tanker into storage in Sharjah and Dubai. Prices are established from local resellers in Sharjah and are around $1,325/t for 4 cSt, $1,340/t for 6 cSt and $1,385/t for 8 cSt, all on an FCA basis Hamriyah, or plus RTW delivery charge of $20/t-$55/t if delivered. Selling prices from producers are not disclosed, therefore prices cover storage costs and profit for the reseller.

Africa

Greek sellers are only offering smaller quantities of Group I grades in flexies for receivers in Turkey.

Moroccan receivers were due to take a cargo from one of the Spanish refineries, but this is now in doubt following the power outage a couple of weeks back. Alternatives may be to investigate possibilities from Sonatrach ex Augusta in Sicily.

The large 19,000-ton cargo that loaded out of Rotterdam and Fawley, U.K., for a well-known major will discharge in Durban in early June.

A stand-alone cargo out of Fawley will load with around 5,000 tons of three Group I grades for receivers in Tema, Ghana. This cargo forms part of the supply for the Ghana tender, which is issued on an annual basis, but has been retained by the same seller for a number of years now.

The Nigerian market remains topped up with base oils, and resellers are trying to move as much of the in-tank quantities before the start of the rainy season. When the rainy season starts, some roads become impassible, preventing the movement of goods and services.

Traders may wait until after the end of the rainy season to seek more supplies, which would mean no cargoes arriving before late August or September.

Two traders who had formerly been active in Nigeria have stopped offering Russian barrels there, at least for the moment. It may be that Russian base oils for export are in limited supply or have risen in price, making them a less attractive proposition for Nigerian buyers.

There are still Russian barrels in tank in Apapa, and sellers are struggling to move these quantities out of storage – some say because of quality or specification issues.

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

The Nigerian naira’s exchange rate to the dollar rose slightly the past week to NGN 1,604, according to the Central Bank of Nigeria.

Prices in Lagos for U.S.-sourced material are unchanged at $965/t-$980/t for SN150, $990/t-$1,010/t for SN500 and $1,080/t for bright stock, all basis CFR Apapa port.

Russian base oils imported from Russia or Egypt are priced at $895/t for SN150, $910/t for SN500 and SN900 at $985/t, again all basis CFR Apapa. There are no current offers showing for Russian barrels, at least at low prices that would be considered by Nigerian receivers.

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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