Prices are under severe pressure and are approaching the levels of feedstock costs. Around April or May of this year, Group I light neutrals were selling for around $350 per metric ton over vacuum gasoil. The premium has now narrowed to less than $50/t, and light neutral prices are threatening to fall below VGO.

Given the high levels of inventories, it would be uneconomic to reprocess the base oils to convert to distillate, so producers are between a rock and a hard place, having either to sit on the stocks whilst minimizing further output or selling below cost. Neither option is appealing to refiners.

The ironic part of this picture is that bright stock remains relatively tight and continues to carry a substantial premium to solvent neutral grades.

The arbitrage to West African destinations is closed due to alternative supplies, mainly from United States sources. More distant export possibilities, such as India and the Middle East Gulf, are closed due to ongoing threats to shipping by Houthi militants in Yemen. Detouring around the Cape of Good Hope is not economical for European sources.

In the Middle East, the fragile ceasefire between Israel and Hamas in Gaza continues, but Israel bombed Hezbollah targets in Beirut last weekend, killing a number of leaders in the process. Breaths are being held that new fighting will not break out.

Middle East Gulf receivers of Group I and Group II base oil cargoes have sourced most of these from the U.S. or Asia-Pacific locations, although large quantities have also come from Yanbu and Jeddah, Saudi Arabia. As the region shifts toward increased use of premium base oils, Group II imports from Singapore, South Korea and the U.S. have picked up.

Even in West Africa there have been deliveries of quantities of Group II base oils, unheard of until recently due to higher prices than the traditional Group I grades. Certain U.S. Group II suppliers have been keen to move inventory and have discounted these grades sufficiently to be competitive in markets such as Nigeria.

South Africa heads into summertime with base oil demand at the highest for some years. Imports are coming from Europe, the U.S., Asia-Pacific and Saudi Arabia. This region is now totally dependent on imports of all three base oil groups, and demand for premium grades is growing similar to how it is in Middle East Gulf regions. 

Outlooks for 2026 vary from region to region, with the Middle East viewed as in line for considerable expansion and development, whilst Europe is seen likely to remain dull. The Mediterranean region looks more positive, with Spain, Italy and Greece all predicted to blossom during the first half of next year, although this may be tempered by what happens throughout the rest of Europe.

Crude and Gas Oil Prices

Crude prices softened around $2 per metric ton last week and continue to show lower levels compared to the previous four weeks. Much depends on the outcome of negotiations around Russia and Ukraine, and whether concessions will be granted to Putin to re-engage with other G7 nations. Sanctions currently remain firmly in place from the U.S., Europe and other allied nations.

Dated deliveries of Brent crude: $62.90/bbl, January front month
West Texas Intermediate: $57.45/bbl, January front month
European low-sulfur gas oil: $699 per metric ton, December front month

Source: London ICE trading late Nov. 24.

Europe

Inventories are rising for solvent neutral grades with sellers drawing a blank regarding export possibilities. There are perhaps opportunities to sell excess material into the Turkish market where supply trends have materially changed with a lack of Russian cargoes arriving into Turkey.

The hard facts of the European markets are that no one supplier has the full slate of Group I base oils available in quantity to look at export sales, and the available quantities aren’t sufficient to support FOB prices and cargo economics which would be acceptable to sellers.

Demand within Europe is poor and is not expected to improve within the next few months. In Hungary, Mol suffered a refinery fire that led the company to declare force majeure for base oil supplies. The company has been able to access Group I grades from PK Orlen in Gdansk, and also rerefined light neutrals from Kalundborg, Denmark. It is envisaged that the company will continue to source material from these suppliers and to look at any other alternative supply points.

European prices are softer. Discounts have been dispensed with, and prices are now offered on a new net basis. Sellers face problems moving material that is currently in tank, and may be forced to further lower numbers until buyers are able to take quantities prior to year end.

With all parties striving to attain low levels of inventory and stocks at year-end, there could be some surprising deals done during December. The enigma is that bright stock availability is still tight. This grade maintains a large premium over both light and heavy solvent neutrals.

Prices for solvent neutral grades are lowered here, particularly for potential export offers, which may or may not come about.

Group I

Exports, FOB
SN150: $645/t-$685/t
SN500: $710/t-$745/t
Bright stock 150: $1,155/t-$1,195/t

Northwestern Europe, FCA Antwerp-Rotterdam-Amsterdam
SN150: $800/t-$825/t
SN500: $875/t-$910/t
Bright stock 150: $1,275/t-$1,340/t

Eastern Europe: No prices advised due to ongoing unavailability of products.

Pan-European, FOB/FCA basis
SN150: €655/t-€695/t
SN500/600: €725/t-€760/t
Bright stock 150: €1,100/t-€1,135/t

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

The euro’s exchange rate with the U.S. dollar was at $1.15165 Monday.

European Group II prices are also coming under downward price pressures, due to two factors. First, European prices are far higher than other regions such as the U.S. and Asia-Pacific. Second, buyers are very much aware of the collapsing values for Group I base stocks, which is increasing the differential between the groups. Buyers are quick to suggest that any differential between the two base oils should be preserved and fluid.

Buyers are realistic in saying that they expect a premium to be applied to Group II base oils, but they object to the order of magnitude currently seen in the market.

Even demand for Group II base oils appears to be faltering a little, with blenders around Europe all agreeing that they will take only contracted volumes during December and will not be coerced into purchasing additional quantities.

Prices are taken lower looking forward into December.

Group II
Imports, FCA basis
110N: €860/t-€885/t
150N: €875- €895/t
220N: €880/t-€900/t
600N: €975/t-€1,025/t

European production
150N: €965/t
600N: €1,110/t

Group II prices are subject to selective discounts depending on buyer reputation and quantities purchased. 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.

European Group III base oils are experiencing positive demand, especially with regard to the 4 centiStoke grade. Six and 8 cSt are available but with no spot sales reported for the 4 cSt product. All availability has been allocated to various customers by distributors moving though to the end of the year. There are still cargoes to arrive prior to year end, adding to availabilities. Cargoes for one seller will continue to arrive into Europe from South Korea until production is started in Saudi Arabia, after which all cargoes for this seller will be sourced from Yanbu.

Increasing production will be crucial for the European Group III market, so with additional barrels coming in from Saudi Arabia and the U.S., whilst new European production of Group III base oils will be forthcoming with the Shell refinery conversion in Germany. Additional availabilities will start to ramp up from next year culminating towards the end of the decade.

Group III
With partial slates of finished lube approvals, FCA Antwerp-Rotterdam-Amsterdam and Northwestern Europe
4 cSt: €1,165/t-€1,190/t
6 cSt : €1,135/t-€1,155/t
8 cSt: €1,125/t-€1,145/t

Fully-approved, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe, Spain
4 cSt: €1,610/t-€1,625/t
6 cSt: €1,595/t-€1,620/t
8 cSt: €1,585/t-€1,610/t

Products sold on a delivered basis are subject to transportation costs, which will be added to the prices above.

Rerefined Group III prices remain unchanged at €885/t/t-€920/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Baltic Sea

Domestic Russian SN500 prices had moved upwards by $10/t and then last week it was reported that prices had dipped by $5/t. Basically, no one appears to have any real grasp as to what is happening on Russian base oils either in the country or on an export basis.

There have been no mention of export prices or export cargoes leaving the Baltic. With no Russian offers for Nigeria, and no material moving into Turkey, the assumption is that all Russian refineries are maintaining supplies to domestic or internal users who are dependent on these supplies.

Even reports of Russian base oils being used in blending in some regions of the Baltic, appear to have disappeared, with no reports of any material being smuggled across borders.

Ukrainian drone strikes on Russian refineries may be taking their toll on production of all petroleum products, base oils being only one of these products. Rumours are heard of vehicles queuing for fuel at service stations, but only outside the main cities of Moscow and St Petersburg, where this would be seen to be embarrassing for the Kremlin and Putin.

Reports from Nigeria indicate that no Russian offers have been made in recent weeks, backing up the assumption that no exports are leaving Russia at this time.

With no new information notional levels remain as previous.

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

Black Sea & Turkey

No further Russian base oil cargoes have been seen or reported moving into Turkish ports, with local sources commenting that Russian base oils are no longer available, and may be re-routed to Russian domestic users experiencing supply chain interruptions due to Ukrainian drone strikes.

Rosneft’s last recorded CIF/CFR price levels were at $590/t for SN150, with SN500 at $635/t, but these no longer have any validity, and are only indicated for historical record.

Turkish base oil prices are given as indications only being maintained at historical levels, with no reported cargoes arriving from Rosneft, ex-tank prices are in respect of previous cargoes.

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

Rosneft and Bashneft, CIF/CFR Gebze (historical)
SN150: $590/t
SN500: $655/t

There are reports of a buy tender for Petrol Ofisi, but details are not available at this time. This would not be unusual, but previously this company have issued ‘buy’ tenders for various quantities of different base oils but have declined to purchase. It may be a method of price checking.

Tupras
Spindle oil: Tl 33,360.00/t plus VAT Tl 8,569.64/t
SN150: Tl 27,338.00/t plus VAT Tl 7,365.04/t
SN500: Tl 33,805.00/t plus VAT Tl 8,658.44/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 from Turkish traders
110N and 220N, no current availabilities
350N 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
Tatneft 4 cst FCA: €874/t (product still available, but prices have rocketed over the past 10 days)
Fully-approved Group III from Spain, CIF Gemlik
€1,695/t-€1,725/t.

Middle East

There have been a number of large and smaller cargoes loading on vessels out of Yanbu and Jeddah. The large cargoes of around 18,000 tons in total are mainly bound for the west coast of India and United Arab Emirates, but there have been some small parcels loading for receivers in Dar-es-Salaam, Aqaba, Alexandria and Port Sudan.

Recent reports indicate the planned shutdown of the Luberef from mid November to the end of December for a 45-day period to prepare for its expansion project. The expansion project will include the addition of Group III production at Yanbu which is reported to become available for commercial trade during 2027.

Another large cargo loaded during last week and will discharge in Singapore mid  December along with a Group II parcel which will sail to Durban.

Group I and Group II base oil arrivals are slowing going into UAE ports with only two cargoes recorded during November. One parcel of 6,000 tons of Group I base oils arrived from Rayong in Thailand, and the other originated in Ulsan, South Korea, and will be a Group II cargo of around 8,000 tons. The first cargo discharged at Hamriyah port, whilst the second vessel discharged in Jebel Ali.

Hamriyah still reports delays to tankers arriving to discharge cargo at the port.

European sellers are still investigating export cargoes to UAE, but with voyage economics weighted against this trip due to higher freights and higher vessel costs involved in longer voyage times going around the Cape of Good Hope.

UAE sources comment on Iranian base oil exports. There have been few base oil cargoes loading from Bandar-e Emam Khomeyni from Sepahan refinery. Sources have explained that Group I base oils are being delivered by road through Iraq into Syria and Turkey as alternative markets.

Large quantities of rubber process oil are being exported to Indian receivers in Mumbai and Haldia. A total of 13,000 tons of RPO from Iran was been delivered during October to a number of Indian buyers who are dependent on Iran for supplies of this product. Although not specifically a base oil, RPO is an important export for Iran, with traders taking deliveries into Ras al Khaimah, UAE, then selling into India, or sometimes into Ulsan, South Korea.

No Russian cargoes have been notified as arriving into UAE, reinforcing the probability that base oils from Russian refineries are being allocated to Russian domestic markets.

Prices for base oils imported into the UAE are unchanged.

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 directly from producers in Thailand , some of whom have representation in UAE.

Group II, FCA RTW UAE and Oman
110N, 150N and 220N: $1,285/t-$1,325/t
600N: $1,395/t-$1,420/t

The high ends of the ranges refer to material being delivered by RTW around U.A.E. and into northern Oman. Group II base oils are imported into the UAE from a number of sources in the Red Sea, the U.S., South Korea and Singapore, being resold FCA UAE, or on a truck delivered basis throughout the UAE and Oman. Deliveries are made through UAE distributors who can purchase base oils directly from Luberef in Saudi Arabia, and also from U.S. and Far East majors and traders.

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

The ranges of Group III prices above include a reseller margin of around $90/t to cover storage, handling and margins. RTW deliveries from distributors can incur an additional charge of $20/t-$55/t, depending on delivery location and quantity.

Middle East Gulf Group III base oils produced in Al Ruwais, UAE, and Sitra and are delivered by sea into Hamriyah and Jebel Ali in U.A.E.. These base oils are offered for resale through the appointed distributors.

Netbacks in respect of Group III base oils loaded ex Sitra and Al Ruwais for distributor sales in Europe, U.S. India and China are maintained between $1,045/t-$1,075/t for 4, 6 and 8 cSt Group III grades.

Netbacks in respect of GTL Group III+ base oils ex Ras Laffan in Qatar, remain between $1,085/t-$1,100/t. Levels are indications only since there are no distributors involved.

Middle East Gulf Group III netbacks are assessed using selling prices in known markets, less estimated marketing costs, margins, handling, storage and freight.

There is additional confirmation of a number of large cargoes of 20,000-25,000 tons reported leaving Qatar for Singapore, Rayong, Bangladesh, and ports along the U.S. Gulf Coast during September and October.

Another vessel has loaded a parcel of around 34,000 tons, and is thought to be routed to Northwestern Europe, perhaps Hamburg, for discharge. More information on this vessel movement is being sought this week.

Africa

The 3,000-ton bright stock cargo that recently loaded out of Yanbu is believed discharging in Alexandria this week for EGPC.

This report has identified a vessel that is delivering base oils into Dar-es-Salaam, Tanzania. Dar-es_Salaaam is being supplied from Yanbu and Jeddah.

A cargo previously reported as bound from Northwestern Europe – Rotterdam and Fawley – to Durban, South Africa, appears now to be fixed for a voyage to Singapore. Another vessel may still load during December for Durban.

A stand-alone cargo of around 10,000 tons Group I base oils loading out of Fawley will deliver 5,000 tons of SN150, SN500 and bright stock into Tema, covering the Ghana tender. The rest of the cargo will be discharged between Abidjan, Cote d’Ivoire, and Conakry, Guinea.

From news heard this week, there are no current offers for any Russian base oils to go into Nigeria. Regular receivers in Lagos’ Apapa port are now looking elsewhere for alternative supplies of Group I base oils. It looks like there will be at least a temporary break in suppliers such as Lukoil sending large base oil cargoes to Apapa  from the Baltic.

A number of cargoes were delivered recently into Apapa. One of 10,000 tons was purchased by a European trader from Phillips 66 ex the U.S. Gulf coast, and finished discharging some 15 days ago.

Another cargo has loaded from PBF in Paulsboro, New Jersey state, with 10,000 tons of SN150, SN500 and SN900. A 6,000-ton cargo loaded out of another U.S. Gulf source.

One trader appears to be offering prices significantly below the rest of the market without having supply cover from a producer or supplier.

There are few available barrels around the U.S. market, so some traders are looking at European supplies, but there is a significant gap to prices European suppliers are commanding and those being paid in Africa. Supplies from the Red Sea are uneconomic and unworkable because of high freight costs and difficulty securing vessel fixtures. It Is hard to see where any other cargoes can be sourced.

The peak season is about get underway in Nigeria, but reports are that importers are not particularly concerned to build stocks and are still looking for lower and lower prices to purchase large quantities of Group I base oils.

Offered prices are now at $925/t-$940/t for SN500 and $1,030/t-$1,075/t for SN900, on a CFR basis Apapa.

The black market exchange rate for the Nigerian naira was NGN 1,462 to the dollar Monday.

Group I

Russian origin, CFR Apapa (currently unavailable)
SN150: $840/t
SN500: $900/t
SN900: $970/t

U.S. origin, CFR Apapa
SN150: $840/t
SN500: $930/t
SN900:$1,060/t

Prices have dipped again from previous cargoes notified, as a result of isolated traders offering low levels to attract buyers.

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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