The German economy has been hurt by U.S. tariffs that are badly affecting automobile manufacturing, and a general national slowdown in commercial activity. The U.K. is suffering from high inflation, out-of-control government spending and borrowing, and prospects of economic projections being downgraded. France is mired in a political struggle that is hurting the economy and which could spiral into union strikes and walkouts.

These scenarios play an important and crucial role in Europe’s consumption of lubricants and, in turn, demand for base oils.

In Middle East regions the war in Gaza has taken its toll on business over the past couple of years, and with a fragile peace continuing between Hamas and the IDF, the region is poised on another knife edge. However, there have been reports of strong growth in Middle East Gulf base oil markets, with large quantities of API Group I and Group II base stocks being imported from the Red Sea, Asia-Pacific and the U.S. Exports of Group III are strong as demand for the these grades is growing in existing markets and sprouting in South America and Africa.

Trading is active in West Africa. Following the rainy season, cargoes of base oils have been flowing into markets such as Nigeria, Ghana, Guinea and Cote d’Ivoire, topping up Group I supplies and introducing Group II to the Nigerian scene.

Prices in Europe, the Middle East and Africa markets are generally softer than at the start of this year, and downward pressure still exists across Group I and II sectors. Group III prices remain positive, perhaps under upward pressure due to limited availabilities in key markets.

The price model is totally dependent on supply and demand, fueled by spikes and troughs in refinery production across the grades. Base oil margins have been elevated compared crude and distillate prices, and with crude values forecast to fall, outlooks for base oils premiums are positive, incentivizing refiners to optimize production of these products. The only problem is that demand is at best sporadic, and in some regions, totally missing. This causes stocks and inventory build-ups, which subsequently can cause push prices lower.

A fine balance is what exists throughout the European, Middle Eastern and African base oil markets, with dynamics being controlled by fundamental drivers outside the control of those in the base oil industry.

Crude and Gas Oil Prices

Crude prices have cooled following a mini-spike caused by the perceived breakdown in talks between U.S. President Donald Trump and his Russian counterpart, Vladimir Putin. U.S. sanctions against countries importing large quantities of Russian crude oil are starting to have an effect, with a number of large buyers switching to OPEC suppliers.

Longer term, forecasts are that crude oil will fall dramatically during the first half of next year, with Goldman Sachs insiders predicting that levels for dated Brent could fall as low as $47 per barrel. China and India have indicated that they will limit the import of Russian crude for their national oil companies.

Dated deliveries of Brent crude: $65.05/bbl, January front month
West Texas Intermediate: $61.25/bbl, November front month
European low-sulfur gasoil: $725 per metric ton, November front month

Source: London ICE, late Nov. 3

Europe

Inventories remain high at a number of Group I refineries, whilst other locations experience supply problems. Many refiners are trying various options to move Group I base oils out of storage, but they are running into logistical problems and negative cargo economics when looking to move large swathes of product to the export markets.

It is proving difficult to arrange cargoes to traditional export destinations. West Africa, and Nigeria in particular, are topped up with Russian and U.S.-sourced cargoes. The United Arab Emirates and the West Coast of India are problematic because of high freight costs associated with the detour around South Africa, which would require FOB prices unacceptably low for refiners.

Meanwhile back in Europe, Mol declared force majeure for Group I base oils after a fire at its refinery in Szozhalombatta, Hungary. The search is on for viable alternative sources. Rerefined options are being considered for solvent neutral 150, but finding suitable quantities of SN500 and bright stock may be more difficult.

The irony of this situation is not lost on observers: Refineries in Western Europe have large inventories, but the economics are against sourcing material and transporting to Hungary. Information about the extent of damage and what is needed for repairs are scant so far, so it is difficult to assess how long the unit could be down.

The final tranche of 5,000 tons from a Greek refiner was sold into receivers in the West Coast of India. It was unclear which route the cargo took – whether it risked the Red Sea transit on a neutrally flagged vessel?

The Turkish market could be an option for exporters, since Russian base oil cargoes have ceased the past few weeks – due to supply interruptions from refineries hit by Ukrainian drones, according to local sources. The problem remains, however, that Turkish buyers cannot pay the higher prices charged for imports from Europe or the U.S.

In Europe, bright stock remains relatively short and still maintains a large premium over light and heavy solvent neutrals.

European Group I

Exports, FOB
SN150: $685/t-$720/t
SN500: $745/t-$855/t
Bright stock 150: $1,175/t-$1,200/t

Northwestern Europe, FCA basis, Antwerp-Rotterdam-Amsterdam
SN150: $820/t-$845/t
SN500: $895/t-$935/t
Bright stock 150: $1,275/t-$1,340/t

Eastern Europe,  FCA
No prices advised due to temporary unavailability

Pan-European, FOB/FCA basis
SN150: €685/t-€725/t
SN500/600: €765/t-€810/t
Bright stock 150: €1,120/t-€1,155/t

Pan-European prices are assessed on an aggregate basis from levels in Poland, Hungary, France, Germany, Benelux, Iberia, Italy, Greece and the U.K.

The euro-U.S. dollar exchange rate was $1.15354 on Monday.

European Group II prices are coming under pressure, and principal suppliers have reduced values.  European prices remain higher than in other regions such as Asia-Pacific and the U.S., and imports from the U.S. were among the first to show cracks.

The U.S. supply base dodged again dodged disruption when Hurricane Melissa, which ravaged Caribbean islands, veered east of the Gulf of Mexico coast. This hurricane season was forecast to be more severe than average but impacts on the U.S. have been mild so far.

Prices are adjusted lower to account for reductions offered by the main suppliers.

Group II prices, FCA basis
U.S. imports
110N: €875/t-€890/t
150N: €890/t
220N: €890/t-€905/t
600N: €990/t-€1,055/t

A European producer
150N: €975/t
600N: €1,125/t

The numbers above may be subject to selective discounts. These prices apply to a wide range of Group II base oils that can be sourced from within Europe, the U.S., the Red Sea and Asia-Pacific. Ranges refer to bulk shipments. Smaller quantities are being imported in flexi-tanks.

Demand remains good for Group III base oils, with many of the distributors sitting down with regular customers to discuss contracted volumes for next year. Some sellers are not yet in position to enter negotiations, waiting on confirmation from producers as to final quantities and number of cargoes that will be supplied during 2026.

There are not many material changes happening to the Group III market, apart from a Group III upgrade planned at Luberef’s refinery in Yanbu, Saudi Arabia. As part of the Saudi Aramco family of suppliers, S-Oil will be responsible for the sales and distribution of Group III base oils in Europe from this source. This will obviously be a logistical benefit rather than having to source from Ulsan.

Houthi terrorists in Yemen continue to warn that they will attack ships in the Red Sea that they deem associated with Israel or Israeli companies or individuals. This includes ships flying flags of Israeli allies such as the U.S. and the U.K. Cargoes of Group III base oils moving from Asia-Pacific and the Middle East Gulf to Europe and the U.S. therefore do not have an option to use the Suez Canal transit.

Group III

Oils with partial slates of finished lube approvals, FCA Antwerp-Rotterdam-Amsterdam and Northwestern Europe
4 and 6 cSt: €1,170/t-€1,190/t*
8 cSt: €1,125/t/t-€1,145/t

* One distributor still offers at €1,040/t

Fully-approved, FCA from hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain
4 and 6 cSt: €1,645/t-€1,695/t
8 cSt: €1,710/t-€1,725/t

Product sold on a delivered basis will be subject to transport costs, which will be added to the above prices.

Rerefined Group III
4 and 6 cSt: €885/t-€920/t, basis FCA Germany

Baltic Sea

Russian base oils are still available in some regions of the Baltic, with deliveries by road from Russia and Belarus, which violates European Union sanctions.

U.S. sanctions have been applied to Lukoil and Rosneft, and these edicts are targeted at crude and petroleum products, which of course includes base oils, although it is not apparent how the sanctions would affect flows of Russian base oils from the Baltic. Exports from the Baltic typically go into Turkey and Nigeria.

Lukoil base oil cargoes did come out of Perm refinery, but it would appear that almost all available petroleum products being produced within Russian are being assigned to domestic markets rather than exports. This is thought to be as a result of successful drone strikes on a number of Russian refineries by Ukraine causing damage to production units and storage terminals.

There are still rumors of Russian cargoes being loaded out of the Baltic for Nigeria, but it is impossible to get a handle on quantities and prices for these parcels. There have been no reported cargoes loaded for Gebze, Turkey, hence notional prices for exports out the Baltic have simply become even more notional.

Notional prices for Russian exports, FOB St. Petersburg, Vyborg
SN150: $625/t-$655/t
SN500: $660/t-$685/t

Black Sea & Turkey

Russian cargoes of base oils are missing from the radar going into Turkey, with local sources commenting that material is no longer forthcoming, perhaps re-routed to Russian domestic customers to cover for supply chain interruptions caused by Ukrainian attacks. Drone strikes have been confirmed on refineries producing base oils, such as the Rosneft refinery at Novokuybyshevsk and the Bashneft refinery at Ufa. So far, Perm and Angarsk refineries appear to be operating normally, but there have been repeated strikes on Volgagrad refinery in the south, owned and operated by Lukoil.

The last CIF/CFR prices heard in Turkey for Rosneft base oils were $590/t for SN150 and $655/t for SN500. Lukoil prices from the Baltic had been around $100/t-$150/t higher, perhaps reflecting higher freight rates from the Baltic.

Turkish base oil prices listed below are historical, maintaining ex-tank values for previous cargoes in the absence of new ones.

Group I
Lukoil, CIF/CFR Gebze
SN150: around $835/t
SN500: around $850/t

Rosneft and Bashneft, CIF/CFR Gebze, Turkey,
SN150: $590/t
SN500: $655/t

Tupras, ex rack Izmir refinery
Spindle oil: Tl 34,622.00/t plus VAT Tl 8,821.84/t
SN150: Tl 28,185.00/t plus VAT Tl 7,534.44/t
SN500: Tl 34,220.00/t plus VAT Tl 8,741.44/t
Bright stock: Tl 51,681.00/t plus VAT Tl 12,233.64/t

Sales incur a standard loading charge of Tl 9,487.20/t.

Group II, ex works
110N and 220N, Russian origin: $975/t (currently unavailable)
350N, blended or from alternative source: $1,135/t
150N, from Taiwan or Saudi Arabia: $1,020/t
500N/600N, from Taiwan or Saudi Arabia: $1,240/t

Group III
Partly-approved Tatneft 4 cSt, FCA: €796/t (still available)
Fully-approved, from Spain, CIF Gemlik: €1,720/t-€1,785/t

Middle East

The Luberef refinery in Yanbu is undergoing maintenance, but the UAE continues to receive base oil cargoes from Yanbu and Jeddah, the location of Luberef’s other base oil plant.

The news that Group III production will be starting from Yanbu refinery in 2026 was received last week, along with information that shipping, distribution and sales of these grades within Europe will be under the auspices of S-Oil, the South Korean refiner majority owned by Saudi Aramco.

S-Oil has the infrastructure and experience in the European market, having begun supplying Group II and III from South Korea since the mid-1990s. Quantities and targets for the European markets are not yet disclosed, but it is assumed that the operation will not be less than the current operation which has barrels supplied from Korea.

A large number of Group I and II base oil cargoes arrived into various UAE ports during September and October. Vessels arriving at Hamriyah however, continue to experience berthing delays because port authorities give precedence to dry cargo and container vessels.

Base oils cargoes have been sourced from the U.S. and Asia-Pacific. Some vessels with base oil cargoes have diverted to Fujairah and Jebel Ali to avoid delays and demurrage at Hamriyah. Talking with local sources, this problem was foreseen some time back, but there are currently no plans to extend berths at Hamriyah to accommodate bulk liquid cargoes.

European producers cannot consider export cargoes to the UAE because of the freight costs of detouring around southern Africa. That said, a cargo of 5,000 tons of heavy solvent neutrals was loaded from Aghio, Greece, and sailed to receivers in India at an acceptable price level.

UAE sources continue to say that few Iranian export cargoes are loading from Bandar-e Emam Khomeyni, those few having originated from Sepahan Oil’s refinery. Sources said Group I base oils are being delivered by road through Iraq into Syria because prices are better.

Group II and III imports are moving into Iran through traders based in the UAE and India. Receivers tend to be some of larger blending operations in Iran, who then resell to smaller users in the domestic market.

One interesting feature gleaned from local contacts is that there have been no Russian cargoes arriving in the UAE for some weeks, perhaps months. This reinforces the premise that base oils produced by Russian refineries are being channeled into domestic markets.

Group I, CIF/CFR UAE ports
SN150: $885/t-$920/t
SN500: $940/t-$965/t
Bright stock: $1,220/t-$1,245/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, UAE and Oman
110N, 150N and 220N: $1,325/t-$1,360/t
600N: $1,425/t-$1,455/t

The high ends of the ranges refer to material being delivered by RTW around UAE and into northern Oman. Group II base oils are imported into the UAE from the Red Sea, the U.S., South Korea and Singapore. Deliveries are made through local distributors who purchase directly from Luberef and from U.S. and Far East majors and traders.

Group III, FCA Hamriyah or RTW in the UAE and Oman
4 cSt: $1,225/t
6 cSt: $1,235/t
8 cSt: $1,255/t

These ranges of Group III prices include a revised reseller margin of around $90/t to cover storage, handling and margins. RTW deliveries from the distributor can incur an additional charge of $20/t-$55/t depending on delivery location and quantity. Group III base oils produced in Al Ruwais, UAE, and Sitra, Bahrain, are delivered by sea into Hamriyah and Jebel Ali, UAE, then offered for resale through appointed distributors.

Group III oils from Al Ruwais and Sitra are also exported to markets around the world. Netbacks for distributor sales in Europe, the U.S., India and China are unchanged at $1,045/t-$1,075/t for 4, 6 and 8 cSt grades, which may reflect FOB prices.

Netbacks for gas-to-liquids Group III+ base oils ex Ras Laffan, Qatar, remain at $1,085/t-$1,100/t, but these are given only as indications since no distributors are involved. Middle East Gulf Group III netbacks are assessed using selling prices in known markets minus estimated marketing costs, margins, handling, storage and freight.

Africa

There have been a number of smaller cargoes of between 3,500-4,500 tons of Group I and II from a hub in Valencia, Spain. These quantities are delivered into Alexandria and Haifa, Israel, using the same vessel. A bright stock cargo of around 3,000 tons was delivered from Yanbu to EGPC in Alexandria.

The large base oil cargo loaded from Rotterdam and Fawley, U.K., sailed towards Durban, South Africa. Charterers employed one of the usual vessels for this regular voyage. The cargo consists of around 18,500-20,000 tons of all types of base oils.

Russian prices are still the order of the day in Nigeria, but it is unclear if Russian cargoes can be arranged currently. If other destinations such as Turkey and the UAE are anything to go by, then Russian cargoes coming into Nigeria may have been halted.

Receivers in Lagos are still determined that they can access Russian barrels from traders, but there are doubts. Perhaps buyers are worried they will lose leverage if Russian cargoes are no longer available.

Now that the rainy season is ended, Nigeria seems to be awakening and a number of base oil cargoes are down to discharge over the next few weeks. One cargo of 10,000 tons has been purchased by a European trader from Phillips 66 ex the U.S. gulf coast.

Another cargo has loaded out of the U.S. East Coast with another 10,000 tons of SN150, SN500 and SN900, and traders arranged or are arranging a 6,000-ton cargo from another U.S. gulf source. It seems the threat to stop buying SN900 has not been carried out by buyers who moaned about the high prices they had to pay when bright stock was used in the blending.

Lower FOB numbers are helping sellers compete with low bid prices, as some U.S. suppliers are keen to move large slugs out of tank. However, now that these cargoes have been fixed, there are not many sources with available barrels. European supplies are out of the question, and supplies from the Middle East are uneconomic and have issues arranging vessels.

Offers in Nigeria are at $925/t-$940/t for SN500 and $1,000/t-$1,120/t for SN900, on the basis of CFR Apapa port in Lagos.

The black market exchange rate for the Nigerian naira was NGN 1,443 to the dollar Monday.

Nigeria Group I prices
Russian origin, CFR (if available)
SN150: $860/t-$875/t
SN500: $885/t-$900/t
SN900: $1,060/t-$1,075/t

U.S. Origin, CFR
SN150: $970/t
SN500: $930/t
SN900: $1,100/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.

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

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