This week has seen a surge in demand across all regions for various quantities of base oils. Whether this is as a result of buyers and sellers returning from summer holidays or whether it reflects increased demand for finished lubricants is unclear at this time. Suffice to say that inquiries and confirmation of contractual supplies have flooded the market and may indicate a general increase in base oil demand.
This development has not been restricted to the European markets, where a mini spike might have been expected after the holiday season – it is also happening in parts of Africa and the Middle East.
For example, parts of West Africa seem to have woken following the end of the rainy season, with inquiries for large API Group I quantities in markets such as Nigeria and Angola. Meanwhile in the United Arab Emirates, buyers have been observed during the past week searching for large cargoes of Group I and II from suppliers in the United States, Europe and Asia-Pacific.
The arbitrage is open for material to flow from the U.S. to the Middle East Gulf, but Far East supplies are tighter and higher priced following increased demand from local markets. Europe remains adrift, with prices still higher than other markets but cracks are appearing in this picture, and some sellers seem prepared to large Group I export sales.
The European scenario may be changing due to a dull domestic market and a build-up of refinery inventories over the past months due to relatively poor local demand. Surplus quantities of Group I base oils are certainly in evidence, with a number of suppliers offering aggressive price levels to move material.
European sources typically do not have the full range of Group I grades available to load in one cargo, encouraging shipments gathered from two or even three ports.
This report is reintroducing European Group I export prices after export cargoes were purchased the past weeks. Group I base oil margins are being squeezed, with premiums over diesel and crude diminishing as sellers become more price aggressive as part of an attempt to move quantities more expeditiously.
Around the regions, Group II prices appear to be holding firm, with little slippage over the summer months. In Europe and the Middle East there is certainly a marked trend for blenders to make the transition to Group II from Group l, as the latter’s prices become more competitive from sources in the U.S., Asia-Pacific and the Middle East. European Group II price levels remain at a premium to other regions, and appear to face little to no downward pressure.
Crude and feedstock prices remain flat, with no real impetus for movement. Crude availability is expected to build over the next few months, with OPEC+ producers ramping up production to maximize crude realizations. Many countries producing crude oil are reliant on this commodity to prop up their economies.
Crude and Gasoil Prices
Analysts and economists are forecasting that crude prices will retreat in coming months as global production exceeds demand.
However, global oil demand is projected to increase by 680,000 barrels per day in 2025 and 700,000 bbl/d in 2026 to reach 104 million bbl/d. Despite weaker than expected demand in China, India and Brazil in recent months, demand grew by 600,000 bbl/d during the second quarter, entirely in countries that are not part of the Organization for Economic Co-operation and Development.
This trend could prop up crude prices, keeping them around current levels unless some significant geopolitical event occurs to alter the supply-demand balance.
Dated deliveries of Brent crude: $68.20/bbl, November front month.
West Texas Intermediate: $64.75/bbl, October front month.
European low-sulphur gasoil: $685 per metric ton, September front month.
Source: London ICE trading late Sept. 1.
Europe
Group I prices around Europe are showing weaker based on a number of export offers heard the past couple weeks. Regional prices remain relatively stable, but if sellers are prepared to offer lower numbers for large quantities for export markets, it will create downward pressure. Sellers maintain that lower export prices are offered only to clear excess stocks that built up during the quieter summer period.
Export barrels were heard in offers at $765 per ton for solvent neutral 150, whilst SN500 was touted at $845/t. Bright stock from another source was offered at $1,200/t, whilst a quantity of 3,000 tons of SN150 from the same source was offered at $740/t. These prices were all on an FOB basis ex two Mediterranean ports.
The previously mentioned cargo of 9,000-10,000 tons was purchased by a trader and will be delivered to receivers in Apapa, Nigeria.
Group I Prices
Exports from Europe, FOB
SN150: $720/t-$745/t
SN500: $795/t-$820/t
Bright stock 150: $1,170/t
Sales within Europe, FCA Antwerp-Rotterdam-Amsterdam
SN150: €885/t-€925/t
SN500: €965/t-€1,020/t
Bright stock 150: €1,340/t-€1,385/t
Eastern Europe, FCA
SN150: €966/t
SN500: €1,021/t
BS 150: €1,352/t
Note: Prices for September are higher than Pan-European levels but are considered posted prices and may not reflect actual selling levels.
Pan-European, FOB/FCA basis
SN150: €755/t-€795/t
SN500/600: €825/t-€855/t
Bright stock 150: €1,185/t-€1,260/t
Pan-European prices are assessed with representative levels from Poland, France, Germany, Benelux, Iberia, Italy, Greece and the United Kingdom
The euro’s exchange rate with the U.S. dollar hardly changed the past week and was at $1.17022 Monday.
Sources around the market said last week that European Group II prices appeared not to have weakened going into September, but downward pressure may exist. Buyers are reportedly citing the ever increasing differential between Group I and Group II, along with the premiums Group II grades have versus diesel and crude prices.
European Group II prices remain higher than other regions, providing incentive for buyers to request and negotiate discounts. This week has seen concessions from sellers on a number of prices, particularly for the heavier grades.
Group II prices, FCA basis
110N/150N: €925/t-€975/t
220N: €995/t-€1,025/t
600N: €1,085/t-€1,120/t
Prices refer to a wide range of Group II base oils from Europe, the U.S., the Red Sea and Asia-Pacific. For exports, the ranges refer to bulk shipments, though smaller quantities are also imported in flexi-tanks.
Group III demand remains firm, particularly for the 4 centiStoke grade as distributors play catch up, delivering recently arrived material to customers who have been waiting.
The 4 centiStoke grade remains tight with distributors frequently selling all available quantities to regular buyers. One supplier still maintains that there are shipping problems affecting Group III grades from South Korea, but because this supplier negotiated contracts at prices that were deemed well below market prices at the time and are now much lower than other suppliers, “shipping problems” could be seen and used as an excuse not to have availabilities.
With sources in Middle East Gulf now operating at optimum capacity and demand in Europe continuing, European distributors are purchasing at a healthy clip.
Group III prices
Oils with partial slates of approvals, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe
4 and 6 cSt: €1,070/t/t-€1,100/t
8 cSt: €1,125/t/t-€1,145/t
Fully-approved, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe, Spain
4 and 6 cSt: €1,675/t/t-€1,715/t
8 cSt: €1,725/t/t-€1,740/t
Where product is sold on a delivered basis, a premium covering transport costs will be added to the above prices.
Rerefined Group III, FCA Germany
4 and 6 cSt: $995/t/t-$1,045/t.
Baltic Sea
Group I and II base oils from Europe and the U.S. are now flowing regularly into the Baltic states, sometimes by road tanker, but also by sea into ports such as Riga and Liepaja, Latvia, and Klaipeda, Lithuania.
Lubricants blended in Baltic countries are primarily for home markets although some grades are exported to mainland Europe and the U.K. Blending operations in Lithuania, Latvia and Estonia have come a long way since they relied on Russian Group I. Operations have scaled up to reflect the latest and current performance specifications.
Bulk cargoes of base oils from Lukoil’s refinery in Perm, Russia, are loading out of the Baltic, primarily from St. Petersburg. In the past, international traders also loaded base oils from Gazprom, Rosneft and Naftan in Belarus, but these products apparently are now mainly allocated to the Russian domestic market, though are being transported long distances by rail to load out of Sea of Azov ports for Turkey and other export markets.
Establishing accurate Baltic prices for Russian Group I exports is nebulous to say the least, but if cargoes are discharged in Turkey or Nigeria, CIF/CFR prices are disclosed by importers, customs officials or shipping agents. Using estimated freight rates, ballpark FOB prices can be established.
Notional prices, Russian Group I exports, FOB St. Petersburg
SN150: $655/t-$675/t
SN500: $680/t-$695/t.
Black Sea & Turkey
Contacts in Turkey have remarked that Russian cargoes are not making landfall as often as they did previously, and supplies of Russian base oils are sporadic, with gluts of material occurring from time to time, followed by dearths with few availabilities.
It is unclear why these supply swings occur, with some saying that it is down to the requirements of the domestic markets within Russia whilst others postulate that base oils, along with petroleum products, are being exported to China and North Korea.
Turkish buyers are back again trying to buy quantities of U.S. barrels of Group I and II through traders based in the U.S. and Europe. No cargoes have been purchased to date as prices remain the sticking point. Receivers are looking for levels pitched just above Russian numbers, but this will be a tall order as the current gap is around $250/t.
Reports of a Russian import price below $600/t has been attributed to Rosneft SN500. This level would be below refinery gate costs.
Turkish Base Oil Prices
Lukoil Group I, CIF/CFR Gebze
SN150: around $835/t
SN500: around $850/t
Rosneft and Bashneft Group I, CIF/CFR Gebze
SN150: $765/t
SN500: $785/t
Tupras Group I, ex rack Izmir refinery
Spindle oil: Tl 35,447/t plus value-added tax Tl 8,986.84/t
SN150: Tl 30,261/t plus VAT Tl 7,949.64//t
SN500: Tl 34,204/t plus VAT Tl 8,738.24/t
Bright stock: Tl 52,506/t plus VAT Tl 12,398.64/t
Sales incur a standard loading charge of Tl 9,487.20/t.
Group II, ex-works
110N and 220N, Russian origin: $1,085/t
350N, blended or from alternative source: $1,210/t
150N, from Taiwan or Saudi Arabia: $1,255/t
500N/600N, from Taiwan or Saudi Arabia: $1,475/t
Group III
Partly-approved, from Tatneft, FCA
4 cSt: €987/t
Fully-approved from Spain, CIF Gemlik
4, 6 and 8 cSt: €1,825/t/t-€1,855/t.
Middle East
Cargoes are loading out of Yanbu and Jeddah, Saudi Arabia, moving some quantities of Group I but more Group II grades for the West Coast of India and the UAE. From shipping lists it can be seen that cargoes are also loading for Karachi, Pakistan, and receivers in ports such as Aqaba, Jordan, and Port Sudan, Sudan. A 3,000-ton parcel of bright stock will load out of Yanbu for Alexandria under the EGPC supply contract.
A Group II cargo of around 7,000 tons will load from Yanbu and sail for Durban, South Africa, discharging during September or October.
The continuing saga of the Houthis in Yemen brings news that Israeli forces have targeted and bombed a meeting of Houthi commanders, and from reports have killed a number of key personnel in Sanaa. Whether this action will allow ships to safely transit the Bab-al Mandeb Strait remains to be seen, although most vessels do not run the risk of a Red Sea transit, preferring to detour around the Cape of Good Hope.
Middle East Gulf
U.S. and European traders are in process of chartering vessels to deliver cargoes of Group I and II from the U.S. Gulf of Mexico and East coasts into receivers in the UAE and also the West Coast of India. Some of these traders are opting to sell available barrels into the UAE and India rather than try to compete with Russian prices going into Nigeria. Fewer hassles are involved selling into the former markets – no finance issues, no demurrage and fewer headaches. Traders are able to guarantee margins and receipt of funds when payment is due, 30 days from date of bill of lading, secured by a letter of credit.
UAE receivers are also receiving cargoes of Group I and II base oils from Luberef, loading from Yanbu and Jeddah.
There are no reports of base oil cargoes moving out of Iranian ports. Sources in Sharjah have told this report that material is coming out of Iran, but the cargoes do not appear on shipping reports, and it is not clear why. Indian receivers have also confirmed that they have taken delivery of a parcel of around 4,000 tons from Iranian sellers.
Rubber process oil from Iran continues to be delivered into Ras al Khaimah, UAE, in small quantities, and when a suitable quantity of around 3,000 tons is collected, the cargo is loaded for shipment to Haldia, India, or Ulsan, South Korea.
UAE Prices
Group I, CIF/CFR UAE ports
SN150: $930/t-$955/t
SN500: $980/t-$1,020/t
Bright stock: $1,270/t-$1,300/t
Group I cargoes are purchased from traders based in the U.S. and Europe, some of whom have representation in the UAE.
Group II, FCA or RTW basis, UAE and Oman
110N, 150N and 220N: $1,425/t-$1,475/t
600N: $1,510/t-$1,555/t
Group II base oils imported into U.A.E. from Red Sea, U.S., South Korea, Europe and Singapore are being resold ex tank in the UAE or on a truck-delivered basis throughout the UAE and parts of Oman. Deliveries are made by distributors who purchase base oils directly from Luberef but also from the U.S. and European majors and traders.
The highs of the Group II ranges refer to RTW deliveries. Sales are in U.S. dollars or UAE dirhams, the latter being pegged to the dollar at AED 3.67.
Group III, FCA Hamriyah or RTW in the UAE and Oman
4 cSt: $1,295/t
6 cSt: $1,320/t
8 cSt: $1,345/t
Middle East Gulf Group III base oils sourced from Al Ruwais and Sitra are delivered by sea into Sharjah. These base oils are then offered for resale through an appointed distributor rather than on a direct basis from Bapco or Adnoc. Group III prices include a reseller margin of around $75/t to cover storage, handling and operating margin. RTW deliveries incur a charge of $20/t-$55/t
Group III cargoes loading from Al Ruwais, UAE, and Sitra, Bahrain, move to the U.S., Europe, India and China. Receivers in Thailand have also taken a cargo from Al Ruwais. These cargoes are sold FOB to distributors who are responsible for shipping and reselling on arrival in the designated market.
Group III netbacks from Al Ruwais and Sitra are reckoned to be similar and are reassessed this week to reflect selling levels in known markets such as Europe and the U.S. Netbacks are reckoned to lie between $1,030/t-$1,055/t for 4, 6 and 8 cSt grades. These netback levels indicate FOB prices from producers to distributors.
Netbacks for gas-to-liquids Group III+ base oils loading ex Ras Laffan, Qatar, are re-assessed to be between $1,085/t-$1,100/t. Numbers are given as indications only, since with no distributors are involved in this trade and Shell does not disclose information regarding the cargoes.
Netbacks are calculated using selling prices in known markets minus estimated marketing costs, margins, handling, storage and freight.
Africa
In addition to the 3,000-ton Yanbu-to-Alexandria shipment mentioned above, a cargo of around 4,000 tons of Group I and II base oils will load out of Valencia, Spain, for receivers in Alexandria and Haifa.
Chevron appointed Gapuma Group to handle sales and distribution of its Group II base oils in Nigeria.
The transition from Group I to Group II base oil use will be an interesting exercise, since when buyers and receivers in Lagos are arguing to beat down traders to achieve prices commensurate with Russian imported some months ago. Some buyers are also refusing to accept SN900 due to the high price for this grade. It will be fascinating to see how these same buyers react to Group II and Group II+ prices when they are released by the distributor Gapuma.
With the end of the rainy season almost here, Nigerian trading may start to pick up as base oil buyers look to replenish premium stocks from traders facing demands for extremely low prices. Levels being bandied around at the moment include $880/t for SN150, $930/t for SN500 and $1,075/t for SN900.
One trader has managed to purchase a quantity thought to be around 9,000 tons of three Group I grades from two sources in the Mediterranean. The vessel first loaded SN150 and SN500 in the first port, then proceeded to load a quantity of bright stock, and perhaps a quantity of SN150 in addition. The bright stock will be used to blend into a SN900. The cargo is due into Lagos’ Apapa port on Sept. 2.
The Nigerian naira’s black market exchange rate was NGN 1,536 to the dollar on Monday.
Nigeria prices
U.S. Group I, CFR basis
SN150: $880/t-$910/t
SN500: $920/t-$940/t
SN900: $1075/t
Russian Group I, CFR basis
SN150: $880/t
SN500: $930/t
SN900: $995/t
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.
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