Elsewhere, there is good demand in areas such as the United Arab Emirates, where many transactions were put on hold during the short-lived Israel-Iran war. With the peace seemingly holding, players have been emboldened to resume business before the region slows down next month.

In Africa, an exceptionally large and diverse continent, trading is busy in South and East Africa, but elsewhere the rainy season is limiting distribution and tempering logistics for goods and services.

In kind with the European Mediterranean regions, North African markets are seeing good demand for API Group I base oils, with Moroccan and Egyptian buyers purchasing relatively large quantities from sources on the European mainland along with Saudi Arabia.

Base oil prices are generally weaker and facing almost constant downward pressure except for Group III grades. Until recently, Group III oils were oversupplied globally, but the supply-demand balance has swung the other way, due largely to extended maintenance turnarounds and shipping delays from Asia-Pacific sources. Availability in the United States and Europe has shortened, and both markets are eagerly awaiting replenishment cargoes.

Shipping problems – already an issue – were exacerbated by the fighting between Israel and Iran and the threat that ship traffic through the Strait of Hormuz could be disrupted. These uncertainties were enough to limit available tonnage to lift much-needed cargoes, which were already being diverted around Africa’s southern tip, adding costs and time to voyages.

The sum total of these events has limited the number of cargoes loaded out of Middle East Gulf, increasing reliance on Asia-Pacific sources in South Korea and Malaysia. Many refineries in Asia-Pacific, including those with Group III units, underwent maintenance during the second quarter.

In the European Union, the news this week that U.S. President Donald Trump will once again delay tariffs, this time until Aug. 1, to allow continued negotiations on trade deals. This is being seen as good news for exporters in Europe, but it also extends the atmosphere of uncertainty.

Base oils have surrendered some of their premium over distillates and diesel. Prices for the latter firmed over the past three weeks, whilst values for Group I and Group II base oils weakened on adequate availabilities and lackluster demand. Many observers think the premium will continue to be squeezed.

Dated deliveries of Brent crude oil hit $69.25 per barrel Monday, now for September front month settlement, up around $2 from the previous week. West Texas Intermediate rose around $2.50 to $67.50/bbl, still for August front month.

European low-sulfur gasoil prices rocketed to new recent highs, reaching $754 per metric ton, for July front month. All of these prices were taken from London ICE trading late July 7.

Europe

Demand and supply for Europe’s Group I market appear balanced. Maintenance at Group I refineries is  now completed, providing more than adequate supply, and on top of that a couple of import cargoes have been made available for FCA sales ex storage in Antwerp-Rotterdam-Amsterdam.

Demand is erratic after many players previously expected that June and July would see a spike in buying. It is still true that some finished lubricant blenders are considering bolstering inventories against the possibility of crude costs rising during summer.

Quantities of Group I base oils being purchased between now and the end of July will mostly remain in tank until September, although some sources expect a spike in demand in July, prior to a predicted August slowdown.

A great deal depends on what happens with U.S. tariffs on Aug. 1, and many base oil players will remain on edge until some resolution with tariffs.

However, even against rising crude and feedstock values, base oil prices are weak due to a lack of sustained demand. Only bright stock has been able to maintain its premium over diesel.

European bright stock supply remains tight. Sources say there is sufficient availability to cover demand, but buyers continue to pay relatively higher prices for this grade.

Prices for FCA Rotterdam sales are unchanged from last week at $1,035/t for solvent neutral 500, with bright stock being offered between $1,545/t-$1,565/t. These prices refer to cargo imported from the U.S. East Coast.

Pan-European euro prices are taken slightly lower to €820/t-€855/t for SN150 and €875/t-€920/t for SN500 or SN600. Bright stock remains at a significant premium to solvent neutral grades, but values have been nibbled to €1,300/t-€1,355/t.

The euro’s exchange rate with a weak U.S. dollar flatlined and was at $1.17075 Monday.

The moment appears to have arrived for reducing Group II prices in Europe as a couple of importers trimmed discounted prices by €30/t-€50/t. Apparently the premium over Group I grades was unsustainable, or maybe the reason was that European Group II prices were higher than those for other regions.

The timing is interesting, and some sources speculated that Group II suppliers are looking to increase the category’s share of European markets. It also seems again that larger, more powerful buyers were able to negotiate lower prices – a dynamic that is becoming increasingly common. When worked out on a weighted basis, larger quantities of material continue to be sold at the lower ends of the ranges.

Group II prices in Europe are reassessed at €950/t-€995 for 110 neutral and 150N, while 220N is at €1,015/t-€1,045/t and 600N at €1,120/t-€1,150/t. These levels apply to a wide range of Group II base oils from Europe, the U.S., the Red Sea and Asia-Pacific. For imports these numbers pertain to bulk shipments, though smaller quantities are transported in flexi-tanks.

The Group III market in Europe is almost devoid of available material, with 4 centiStoke being exceptionally short. Upward pricing pressure seems likely to continue even after replenishment cargoes arrive.

There is a cargo en route from the Middle East Gulf that will arrive around mid-August, but until then the distributor will only sell to existing contracted customers and will not offer any material on a spot basis. Another Middle East Gulf source is reported to have a cargo arriving into Europe in September. Your columnist will investigate for fixture and vessel details.

Where available, prices rose again for Group III oils with partial slates of finished lubricant approvals. Prices for 4 and 6 centiStoke are now assessed at €1,085/t-€1,095/t, on an FCA basis ex Antwerp-Rotterdam-Amsterdam, while 8 cSt – again where available – is at €1,100/t-€1,125/t, FCA Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Suppliers of Group III oils from Asia-Pacific are reported to have experienced shipping delays, and there is with no news of cargoes arriving into Antwerp-Rotterdam-Amsterdam.

Prices continue rising for European sales of Group III oils with full slates of approvals, perhaps due to the trend for partly-approved grades.  Prices are now at €1,695/t-€1,725 for 4 and 6 cSt and at €1,745/t-€1,760/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 at $1,035/t-$1,075/t for 4 and 6 cSt, basis FCA rerefinery in Germany.

Baltic and Black Seas

There is very little information available about cargoes of Russian base oil exports loading out of St. Petersburg, Vyborg or Primorsk, Russia. Local inquiries produce no details of any vessels or quantities loaded.

Many of the vessels used to export base oils had been operating under Turkey’s flag, but they are no longer recorded in any shipping reports and could be chartered on a confidential and private basis, under direct agreements between charterers and owners rather than the normal practice of involving shipbrokers.

There are no reports of any Baltic cargoes arriving into Gebze, Turkey. Hence it is assumed that the previously mentioned cargo of Lukoil base oils that was supposed to have been loaded out of St. Petersburg did not exist. That cargo was previously rumored to contain 6,000 tons and to have loaded around mid-June.

With no cargoes to consider, estimates of FOB prices for exports through St. Petersburg lean heavily on guesswork. Prices are assessed this week at around $750/t-$775/t for SN150 and $780/t-$795/t for SN500.

Russian base oils are moving into Turkey, but all cargoes seem to be originating from Sea of Azov ports, and quantities appear much lower than a few months ago. As discussed previously, possible causes include increased domestic demand in Russia and problems at Russian refineries – due possibly to shortages of spare and replacement parts or military strikes by Ukraine.

The Turkish market was literally swamped with Russian barrels, but now traders are searching for alternative Group I sources. Europe would have some material available – from sources such as Cepsa, Motor Oil Hellas and Repsol, but prices are too high for the Turkish market.

Sonatrach may be able to offer material out of Augusta, Italy, and ExxonMobil will have availability out of a hub in Valencia, Spain, but again prices will be too steep for Turkish blenders to consider.

Uzbek base oils may be available, but the viscosity range is limited, only going as high as SN450. Iranian material that arriving cross border from Iraq may no longer be available.

Turkish traders quote offered prices of $895/t for SN150, $920/t for SN500 and $1,225/t for SN900, but no details are provided to validate such values.

Delivered prices for Group I Russian base oils from Rosneft are reported at around $865/t in respect of SN150 and $885/t for SN500.

Local prices for Tupras Group I base oils ex Izmir refinery have been drastically reduced, perhaps in preparation for the issue of a tender for a large cargo. The re-issued prices are indicated as follows: Spindle Oil – Tl 35,436/t, plus a duty of Tl 8,984/t; SN150 -Tl 31,872/t, plus duty Tl 8,271/t; SN500 -Tl 35,004/t, plus duty Tl 8,898/t; bright stock -Tl 53,306/t plus duty Tl 12,558/t. These values are for ex rack sales ex refinery, which incur an additional loading charge of Tl 8,199.20/t.

Turkish traders offer Group II base oils ex-works on a two-tier basis. Russian base oils are offered at $1,125/t for 110N and 220N and 350N at $1,315/t, while higher quality grades from Saudi Arabia or Taiwan are at $1,655/t for 500N and $1,295/t for 150N.

Group III from Tatneft in Russia is still available and offered at €1,275/t, while other partly-approved Group III grades are at €1,375/t-€1,400/t. Some sellers have disclosed, though, that these latter grades are no longer available – perhaps because of problems replenishing stocks from the Middle East Gulf or Asia-Pacific stemming from Red Sea transit disruptions.

Fully-approved Group III grades ex Cartagena, Spain, are delivered into Gemlik in small quantities of 800-1200 tons and are priced at €1,825/t-€1,855/t, on a CIF basis. Is has not been ascertained hether the seller is SK or Repsol.

Middle East Gulf

Group I and II base oil cargoes continue to load from Yanbu and Jeddah, Saudi Arabia, including a couple of large cargoes for receivers on the West Coast of India and the UAE. Vessels loading Saudi base oils continue to transit the Bab-al-Mandeb Strait in the Red Sea without problems.

The latest news from Yemen is that Houthis attacked merchant vessel Saturday. The attack was repelled by armed guards on board, but a fire broke out on the ship.

On Sunday Israeli jets bombarded three Yemeni ports thought to be Houthis strongholds – Hodeidah, Ras Isa and Al Salif. The strike also targeted a power station complex at Ras Qantib, causing significant damage and power outages. The strikes are in retaliation for missiles launched at southern Israeli cities.

Saudi cargoes are also shipping for South Africa and Singapore and northbound into Egypt, Jordan and Europe.

The fragile peace between Iran and Israel continues with many players in surrounding countries sighing with relief that potential hotspots such as the Strait of Hormuz remains open.

However, the latest Houthi episode rekindled animosity between the two countries, and it remains to be seen if Mr. Trump will take action against Yemen. There are suggestions that a U.S. carrier may be redeployed to the region to protect shipping. U.S. warships have been attacked 174 times since October 7, 2023, and merchant ships 144 times.

No more reports have come out of Iran regarding the damage caused by U.S. bombing to the refinery in Isfahan, Iran. The extent of the damage remains unknown.

Iranian base oil traders and sellers have ceased all loading of base oil cargoes from southern and western ports such as Bandar-e Emam Khomeyni or Bandar Abbas.  Indian sources reiterated that no Iranian base oil cargoes will be made available for the time being.

Prices for Iranian Group I were heard in early June to be around $965/t for premium SN500 and $945/t for SN150. These prices may or may not be valid now.

A cargo from the western Mediterranean has loaded and will be partially discharged in Haifa, Israel. A vessel was chartered speedily and the cargo has loaded and sailed. Delivery should be made during next week.

Group I base oils delivered into UAE ports have confirmed prices of $945/t-$970 for SN150, $975/t-$995/t for SN500 and $1,420/t-$1,445/t for bright stock, on a CIF or CFR basis. These cargoes were purchased from traders based in the U.S., and a European trader with representation in the UAE.

There are still no signs of Russian base oil cargoes coming into Hamriyah, UAE. As in Turkey, it is not clear quite why Russian imports have dropped off. One UAE based trader has confirmed that a cargo is enroute from Turkey for delivery of a quantity of Group I base oils into Hamriyah and Fujairah. It is assumed that this cargo will be of Russian origin, but quantities and grades were not disclosed.

Netbacks for Group III base oils from Al Ruwais are unchanged following increases last week, indicated at $1,270/t-$1,300/t for 4, 6 and 8 cSt grades.

In late May large cargoes of gas-to-liquids Group III material were loaded out of Ras Laffan, Qatar, bound for India and the U.S. with record quantities. Shipping reports have been consulted to ascertain if any large cargoes were bound for Europe, but little information has been gleaned so far.

Netbacks for these GTL base oils are still indicated at $1,255/t-$1,290/t, FOB Ras Laffan, but these numbers are offered as indications only. FOB netbacks are estimated using distributor selling prices in known markets minus estimated marketing costs, margins, handling, storage and freight.

Group II base oils are being imported to the UAE from the Red Sea, the U.S., South Korea, Europe and Singapore, then resold ex tank in the UAE, or on a truck-delivered basis throughout the UAE and Oman. Adnoc in Al Ruwais, UAE, produces around 120,000 tons of Group II per year, but most of this production goes into in-house blending operations.

UAE prices for imported Group II are unchaged at $1,425/t-$1,475/t for 110N, 150N and 220N and at $1,510/t-$1,555/t for 600N, all on a CFR basis. The highs of the ranges refer to RTW deliveries to buyers in locations in U.A.E. and northern Oman. Sales are conducted either in UAE dirhams or U.S. dollars. The value of the former is pegged to the dollar at AED 3.67.

Group III base oils from Al Ruwais and Sitra continue to be delivered into Sharjah, UAE, but there have been no supplies from Bahrain over the past couple months. Traders in Sharjah say they are low on stocks for this supply, but news was received last week that a quantity, indicated to be around 3,000 tons in total, will be delivered during July. This quantity will replenish stocks from Bapco.

Group III prices in the UAE rose slightly and are confirmed by a Sharjah trader dealing with both Adnoc and Bapco. Prices are $1,360/t for 4 cSt, $1,375/t for 6 cSt and $1,390/t for 8 cSt, all basis FCA Hamriyah or for RTW deliveries, which incur a charge of $20/t-$55/t for delivery around the UAE and Oman.

Prices ex refinery from Adnoc and Bapco are not available. The prices above include a reseller margin of around $55/t to cover storage, handling and profit margin.

Africa

The parcel previously mentioned as loading for Durban, South Africa, now scheduled to reach that destination at the beginning of August. The vessel contains base oils loaded from Rotterdam and Fawley, U.K., along with a small quantity of chemicals, which may be polyalphaolefin.

Reports from Nigeria describe a market that has quieted with the start of the rainy season – which should keep trading muted until early September. Base oil prices are continually being discounted for sales ex tank or on a delivered basis, but no sourcing for new cargoes is taking place. Prices being talked are way out of touch, with buyers looking for U.S. material at extremely low prices – in the neighborhood of those in Russian offers and material now in tank.

Levels being quoted are around $900/t-$920/t for SN500 and $1,000- $1,025/t for SN900, on the basis of CFR Apapa port in Lagos. These prices are impossible to achieve using U.S.-sourced material. However, there are very few chances of procuring material from U.S. sources, with turnarounds still in progress, inventories being built for the hurricane season, and FOB prices which will be higher than previous cargoes. Freight rates are also increasing, with higher bunkers, crew and insurance costs.

In addition, bright stock prices have shot up, making SN900 very expensive to blend. SN900 could eventually become short after the rainy season, which could cause further upward pressure on this grade.

The previously mentioned vessel that brought a base oil cargo to Lagos but did not discharge it has now sailed to Lome in Togo. The cargo probably remains on board but may discharge in Lome, although this is not a usual port for discharging base oils.

The official exchange rate Nigerian nairas hardly changed the past week and was at NGN 1,548 Monday.

Nigeria prices for the last base oils to arrive from the U.S. Gulf of Mexico coast are $890/t-$910/t for SN150, $920/t-$940/t for SN500 and $1,040/t-$1,070/t for SN900, all on a CFR basis ex Apapa.

Prices for imported Russian Group I base oils have risen to $885/t for SN150, $929/t for SN500 and $995/t for SN900, 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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