In addition, Iranian imports of API Group II and Group III base stocks may be subjected to sanctions being considered by allied nations around the globe who see Iran as a threat to weaponize its nuclear power program. Overall, the Islamic Republic could experience severe shortages of raw materials to blend finished lubricants, other than additives and base oils that are currently produced within Iranian boundaries.

The second effect is that shipping in and out of the gulf may become severely curtailed if some owners and operators choosing not to enter the area due to potential problems – for example vessels becoming stranded should Iran try to close the Straits of Hormuz. Such action would risk strangling the movement of crude and petroleum products from Middle East Gulf producers such as Kuwait, Bahrain, Saudi Arabia and the UAE.

The Straits of Hormuz connects the Persian Gulf to the Arabian Sea, and approximately 20% of global oil shipments pass through it. So far in 2025, the strait has handled about 34% of all seaborne-traded oil. While several neighboring countries have invested heavily in pipelines to bypass the narrow corridor, several countries, including Kuwait, Qatar and Bahrain, have no alternative route.

The strait is regulated by the United Nations Convention on the Law of the Sea of 1982. The Traffic Separation Scheme recognized by the UN’s International Maritime Organization is in operation and designates two, two-mile wide shipping lanes for incoming and outgoing traffic. The area is divided between the Iranian and Omani territorial waters. It is understood that vessels could still proceed via alternative routes through the UAE and Oman.

At the writing this report, shipping traffic continued flowing through the strait, but shipowners are reportedly beginning to exercise caution and are choosing to avoid the Red Sea and the Persian Gulf. Many companies and vessels are preparing to reroute in the light of the military strikes.

If transportation through the strait is interrupted it could disrupt global supply chains and produce a spike in oil and natural gas prices. Even if the corridor is not technically closed, becoming part of a war zone would raise insurance requirements, adding to shipping costs for all base oils moving in and out of Middle East Gulf. Vessels available for such shipments could become scarce.

Many cargoes of all base oil types are entering Middle East Gulf destinations, from sources in Asia-Pacific, Europe, the U.S. and the Red Sea. Additionally, Group III cargoes from Bahrain, the UAE and Qatar are exported to global receivers, and these shipments would face similar challenges.

Many Group III cargoes are already detouring on voyages to Europe and the U.S. due to threats that Yemeni rebels pose to Red Sea shipping.

Crude and petroleum product prices moved higher immediately after Israel’s first strikes, and subsequent have done nothing to assuage fears for supplies of crude and products.

That said, on Monday crude prices started to retreat. Whether this trend continues or energy prices spike remains an unknown at this point. Base oil market observers said they can only forecast base oil values in relation to crude.

Dated deliveries of Brent crude reached $71.50 per barrel Monday, still for August front month settlement, down from a peak of $78 last week but about $5 higher from the previous Monday. West Texas Intermediate was at $70.15/bbl, for July front month.

European low-sulfur gasoil also jumped and then partially retreated, finishing Monday at $688 per metric ton, for July front month – a gain of around $45 from the previous week. All of these prices were obtained from London ICE trading late June 16.

Europe

Supply and demand of Group I base oils are largely balanced throughout Europe, now that most maintenance shutdowns are completed. No problems were reported with restarts at refineries involved. Imported cargoes are adding to availabilities, and there are no cries of undersupply from buyers across Europe.

The main questions being asked this week revolve around the near future of crude and feedstock costs. The retreat from last week’s high levels assuaged fears for the moment. Bright stock remains extremely tight, but a number of large blenders around Europe described being able to procure what they now need, though prices have risen.

A parcel of 3,000 to 4,000 tons of solvent neutral 150 was described as being available from a Spanish producer, but a very low price of around $780/t suggests it may be off-spec.

Otherwise prices remain around the same levels as last week. It should be noted that changes in base oil prices often lag movements in crude costs.

Another cargoe has been imported into Rotterdam from the U.S. East Coast containing 3,000 tons each of SN500 and bright stock. Prices are heard to be higher than a previous similar cargo – around $1,035/t for SN500 and $1,565/t for bright stock. One importer that had been selling limited quantities of bright stock at $1,410/t has revamped offers to $1,525/t.

Pan-European prices are unchanged this week at €825/t-€875/t for SN150, €885/t-€925/t for SN500 or SN600 and €1,320/t-€1,375/t for bright stock.

The dollar-euro exchange rate was at $1.15923 Monday.

European Group II prices are weaker, with pressures being brought to discount prices during the first part of this month. Sellers are still trying to promote sales of Group II grades, and some have offered special prices to nominated customers while maintaining higher levels for others. The price ranges remain as previous, but on a quantity weighted basis, larger quantities of material are being sold at the lower ends. Availabilities remain good thanks to large quantities imported during May.

Prices are assessed at €980/t-€1,045 for 110 neutral or 150N, €1,055/t-€1,090/t for 220N and €1,135/t-€1,200/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. For imports the prices pertain to bulk shipments, though smaller quantities are also transported in flexi-tanks.

European river systems received a modicum of rainfall late last week and over the weekend, but drafts remain a headache for sellers and their customers. Low water is affecting barge capacities, in some cases allowing loads of no more than around 50% of capacity. Upper Rhine locations have had to switch to delivering by truck, which raises per-unit delivery costs.

European Group III prices remain firmer on tight availabilities. There are concerns that the fighting between Israel and Iran could affect shipping of cargoes from Middle East Gulf sources, which collectively account for a large chunk of global Group III supply. It is still too early to call out this situation, but distributors are voicing concerns.

Group III deliveries to the European market had already slowed the past couple months, and any further negative impact to supply is not what players want. New shipping difficulties from Middle East Gulf sources would certainly create upward pressure on prices.

Antwerp-Rotterdam-Amsterdam prices for 4 centiStoke grades with partial slates of approvals are now assessed at €1,195/t-€1,225/t, while European and the United Kingdom levels for partly-approved 6 cSt are assessed at €1,190/t-€1,230/t and 8 cSt at €1,220/t-€1,245/t. These prices are on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Last week this column reported that prices for Group III oils with full slates of approvals appeared to have risen and that information on details was being sought. Additional information revealed that these values did not rise, and they remain unchanged again this week – 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.

Prices for rerefined Group III grades are unchanged this week at $1,035/t-$1,075/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Baltic and Black Seas

Putting exact numbers on prices for Group I exports from St. Petersburg remains nigh impossible. There have been few cargo movements for export sales, and even the transport of material that was being dumped into the Turkish market has slowed to a virtual standstill. Previously regular shipments to more distant locations such as Singapore appear to have ceased.

Some attribute this development to simultaneous maintenance turnarounds at a number of Russian refineries and a domestic demand surge. Russia’s domestic market for finished lubricants depends almost wholly on local production because of sanctions. Another possible explanation is that Ukraine’s military has damaged refineries and storage complexes, limiting production of base oils.

For the sake of continuity and interest, this column continues to provide hypothetical FOB prices ex St. Petersburg, now estimating them at $750/t-$775/t for SN150 and $780/t-$795/t for SN500.

Less Russian base oils are moving into Turkey from any route. That market, until recently was awash with Russian barrels, is now searching for alternative Group I sources. Europe has few availabilities for selling into Turkey, and even if material were available, Turkish blenders could not afford to pay European prices.

There is still some Uzbek and perhaps some Azeri material arriving into Turkey, whilst Iranian material that was arriving via Iraq also seems to have dried up.

A Turkish trader-blender indicates availability of Russian oils at $895/t for SN150 and $910/t for SN500 but is unable to confirm dates. SN900 is now suggested at $1,225/t, but with no assurances on availability, timing or even quantity available.

Delivered prices have risen for Rosneft Group I grades, now confirmed at $845/t for SN150 and $860/t for SN500, CIF Turkish ports such as Gebze. These prices apply to material that has been in tank for some weeks and may not reflect pricing for newly delivered material.

Prices are unchanged for Group I base oils ex Izmir refinery: spindle oil – 44,422lira/t plus a duty of Tl 8,884/t; SN150 -Tl 40,071/t, plus duty Tl 8,014/t; SN500 -Tl 43,203/t, plus duty Tl 8,641/t; bright stock -Tl 61,505/t plus duty Tl 12,301/t. These values are ex rack Izmir refinery and incur a standard loading charge of Tl 8,199.20/t.

A Turkish trader is offering Group II oils on an ex works basis at $1,125/t for 110N and 220N and $1,315/t for 350N. The lighter grades may be Russian imports.

Group II from Saudi Arabia or Taiwan is offered at $1,655/t for 500N and $1,295/t for 150N.

Group III 4 cSt from Tatneft in Russia is offered at €1,275/t. Prices for partly approved Group III from other sources are unchaged at €1,375/t-€1,400/t, but there are few availabilities for some of these. Some of these grades had been supplied to Turkey some time in the past in flexies from storage in Rotterdam.

Fully-approved Group III grades ex Cartagena, Spain, continue to be delivered into Gemlik, and prices are estimated at €1,825/t-€1,855/t, on a CIF basis.

Middle East Gulf

Group I and Group II base oil cargoes still load from Yanbu and Jeddah, but quantities have decreased since the end of May. There is still one cargo for delivery into Mumbai anchorage. The start to the monsoon season is imminent, though, and heavy rains can delay vessels and create difficult conditions at anchorage and berthing.

Cargoes are still moving to the UAE, with one fixture delivering base oils into Fujairah, Hamriyah and Jebel Ali ports.

This report is closely monitoring the current shipping lists and information to see if regular owner/operators of vessels chartered to Luberef will continue to send vessels into the UAE through the Straits of Hormuz. There may be alternatives, but trucking large quantities across Saudi Arabia, for example, would greatly increase transportation costs.

Base oil exports from Iranian ports have apparently ceased, and a receiver in Haldia, India, reported being told that no further cargoes will be available for the time being.

Indian traders reportedly offered to supply Iran with base oils, and you’re your columnist has inquired whether that offer is still being contemplated.

Sources in the UAE have reconfirmed that there are severe problems within Iran regarding availability of spares and parts for refinery and plant maintenance, possibly limiting base oil production for local blending.

Iranian Group I prices were last heard at around $965/t for premium SN500, and $945/t for SN150. These prices are historical now and no longer valid and are only mentioned as previous indications on an FOB basis.

UAE prices for Group I oils already delivered into the country are reconfirmed between $925/t-$945 for SN150, $955/t-$975/t for SN500 and $1,395/t-$1,425/t for bright stock, all on a CIF or CFR basis. In March, UAE prices for Russian base oils were around $785/t for SN150 and $795/t for SN500, CIF Hamriyah port. Levels will be much higher now.

Prices offered for material to move into Middle East Gulf ports have been withdrawn or suspended pending assessment by protection and indemnity clubs of shipping possibilities and the potential declaration of war risk premiums for vessels already on the high seas. Some vessels already loaded with base oil cargoes may be diverted to alternative discharge ports, depending on the latest assessment of the situation and how this scenario develops.

A cargo from Spain’s Mediterranean coast, part of which would have been discharged into Haifa, Israel, has been suspended and will not be loaded until the situation has been examined and approved by management.

Extreme shortages could develop for base oils and other goods and commodities arriving into Middle East Gulf ports, with many players in the region looking for alternative means to receive supplies.

A blender-trader based in Sharjah is still rumored to have arranged a Russian cargo loading out of Limas terminal in Turkey. Apart from the current situation, suppliers such as Lukoil may not be so eager to offer barrels into this market. No sources either in Turkey or the UAE could confirm this cargo.

The real risk could be for Group III cargoes loading out of the UAE, Bahrain and Qatar, given shipping doubts and the possibility of Iran trying to close the strait. Vessel owners and operators could become reticent to venture into the region.

By chance and good fortune, May saw record quantities of Group III+ grades loaded out of Ras Laffan, Qatar, with material moving to India, Singapore and Thailand in large cargo lots of around 25,000 tons. These may cease for the moment until the situation in Middle East Gulf is clarified.

Estimated netbacks for Group III base oils from Al Ruwais, UAE, are for the moment unchanged $1,225/t-$1,260/t for 4, 6 and 8 cSt. Netbacks for gas-to-liquids Group III+ oils loaded ex Ras Laffan are also unchanged at $1,255/t-$1,290/t, though these numbers are offered as indications only. FOB netbacks are determined from distributor selling prices in known markets minus estimated marketing costs, margins, handling, storage and freight.

Group II base oils moving into the UAE and already loaded will be assessed on vessel-by-vessel basis, with charterers and owners reaching agreement under contract as to which action to take. Some vessels may be diverted. For example, a shipping agent based in the UAE said Monday that a vessel sailing from the U.S. Gulf of Mexico coast may divert to Singapore or South Africa.

Group II base oils have been imported to the UAE from the Red Sea, the U.S., South Korea, Europe and Singapore and are resold ex tank in the UAE, or on a truck-delivered basis in the UAE and Oman. FCA prices are currently unchanged at $1,425/t-$1,475/t for 110N, 150N and 220N and at $1,510/t-$1,555/t for 600N.

The highs of the ranges refer to RTW deliveries to buyers in locations in the UAE and northern Oman. These oils are priced either in UAE dirhams or U.S. dollars. The former currency is pegged to the latter at AED 3.67.

Group III base oils from both Al Ruwais and Sitra, Bahrain, are delivered into the UAE either in small local vessels, or by road tanker from Abu Dhabi to Sharjah, Dubai and Fujairah. Prices are confirmed through a trusted trader source in Sharjah at $1,325/t for 4 cSt, $1,335/t for 6 cSt and $1,365/t for 8 cSt, all basis FCA Hamriyah or by truck delivery around the UAE and Oman. The latter incurs an RTW delivery charge of $20/t-$55/t.

Prices ex refinery from Al Ruwais and Sitra are not provided, so the prices above include a reseller margin of around $45/t to cover storage, handling and profit.

Africa

Smaller cargoes are reportedly being arranged for Samir in Casablanca from Spanish suppliers. The quantity of off-spec SN150 may be of interest to Samir, but the quantity on a stand-alone basis will to work without the addition of quantities of SN500 and bright stock.

The next parcel to load for Durban, South Africa, will be underway later this month, giving an estimated date of arrival around the end of July or beginning of August. The vessel will load as usual from Rotterdam and Fawley, U.K., with around 18,000 tons of mixed base oil and a small quantity of easy chemicals.

The next cargo to be loaded for Guinea, Cote d’Ivoire, and Ghana will possibly load around mid-July. That would time its arrival to those destination for West Africa’s rainy season, but sources have informed this report that it is normal practice to deliver base oils during the rains.

Nigeria reports contain news of Nigerian receivers requesting offers for one or more cargoes of Russian base oils, but traders normally involved in this trade are not offering firm at this stage. This may be down to the non-availability of quantity large enough to make this trade an economic reality.

A previously mentioned cargo of Russian base oils arrived in Apapa port in Lagos. This cargo was loaded prior to the rumors of shortages and rising prices.

Another vessel that was to deliver a quantity of base oils into Apapa remains at sea offshore Lagos. The vessel is heading to be bunkered, possibly offshore, or perhaps a nearby port. The ship arrived at the anchorage on April 10, and it is believed that the cargo remains on board. Financial penalties incurred by charterers may be looming with demurrage and detention increasing by the day.

The Nigerian naira’s official exchange rate to the U.S. dollars dipped slightly the past week to NGN 1,543.

CFR Apapa prices for the last U.S.-sourced material remain at $890/t-$910/t for SN150, $920/t-$940/t for SN500 and $1,040/t-$1,070/t for SN900.

Prices for Russian base oils imported from Russia or Egypt are indicated at $895/t for SN150, $910/t for SN500 and $1,030/t for SN900, 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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