Forecasts are that January could be quiet for base oil buying, but trading of all base oil types seems likely to increase in February and March due to expectations that finished lubricant demand will rise in March and April. These projections are based on historical and current data, with added information in terms of economic forecasts for various countries. Demand will vary from region to region, with Europe lagging behind the Middle East and Africa due to current and continuing economic woes in the main markets.

For instance, Germany, France and the United Kingdom are looking shaky when it comes to any suggestion of rising demand, but Benelux, Scandinavian and Mediterranean markets are regarded as more positive. Much depends on whether a peace arrangement can be reached between Ukraine and Russia and how long this may take to put into effect.

Likewise, the Middle East markets are split between the Middle East Gulf and the Eastern Mediterranean, where a fragile peace is continuing between Israel and Hamas in Gaza. Middle East Gulf markets, and the United Arab Emirates in particular, are being nominated to show buoyant demand during the first part of next year for base oils, additives and finished lubricants, with new markets opening up for operators in that country. South American markets beckon for specialty lubricants being manufactured in UAE locations.

Products such as transformer oils are seeing increasing demand as new power projects are initiated in countries such as Brazil and Argentina. Chile, Bolivia and Ecuador are also recognized as having rising demand for specialty lubes, whilst there is also a healthy push for more regular supplies of automotive, hydraulic and gear oils that are being exported from UAE hubs.

South Africa and East Africa are being identified as having the greatest potential for expanding lubricants trade, with end users in these regions moving toward higher specification lubricants that are becoming more globally integrated in technology, transportation and manufacturing. West Africa is also seeing more growth than previously, as Nigeria, Ghana and Cote d’Ivoire are poised to take advantage of incoming investment from various sources such as China and India. As a sign of progress, API Group II supplies are being introduced into West Africa, where there is a call for premium base oils rather than the traditional reliance solely on Group l base stocks.

New base oil supply chains are forming rapidly for EMEA markets, different trading and shipping routes are being investigated, and opportunities for new open arbitrages are starting to enter the supply picture.

Base oil usage in Europe will continue to shift toward Group II and Group III, and new production marked to come onstream for both groups prior to the end of this decade. PK Orlen will start to produce quantities of Group II, with a final nameplate capacity at the Gdansk refinery of 400,000 metric tons per year. Shell has begun converting its Wesseling, Germany, refinery to produce Group III base oils, and there are rumors of project elsewhere in the region.

Crude and Gas Oil Prices

Fundamentals remain relatively stable throughout Europe, the Middle East and Africa, with crude and feedstock prices forecast to decrease during 2026. Supply and availability of crude is set to increase next year, with OPEC+ nations upping output. Meanwhile, consumption in large markets such as China remains sluggish. The combination of those circumstances seems likely to depress prices.

JP Morgan, Goldman Sachs and other major banks have forecast that crude prices could dip to around $47 per barrel, which would be the lowest levels in more than 40 years.

Crude prices firmed slightly last week, but have not moved significantly over the last month. Current crude and gas oil prices are as follows:

Dated Brent: $63.35/bbl, February front month
West Texas Intermediate: $59.55/bbl, January front month
European low-sulfur gas oil: $696 per metric ton, December front month

Source: London ICE trading late Monday, Dec. 1.

Europe

Inventories remain higher than producers would like, but it is not clear how sellers will try to clear stocks prior to year-end. The Turkish market remains a possibility to place significant quantities of Group I oils of European quality, due to a dearth of Russian imports, on which this market was almost completely dependent until around a month ago. The problem is that Turkish buyers are unable to borrow dollars from local banks or to open letters of credit. Blenders in Turkey also face the same problems as other in this business – that of managing low inventories at the end of the year.

Demand within Europe remains sluggish and is not expected to improve during December. In Hungary, Mol suffered a refinery fire that caused the company to declare force majeure for base oil supplies, but it was heard last week that letters were sent to customers announcing that normal supplies will resume from Jan. 5.

Until then Mol is depending on sources such as PK Orlen for available quantities of Group I base oil to cover customers immediate requirements. Rerefined light neutrals from Kalundborg, Denmark, have also been sought to supply SN 150. Mol will continue to source material from these suppliers and others.

Going into December European base oil prices remain weak, and offers continue to shrink. Sellers continue to have problems moving material currently in tank and may be forced to lower numbers further. The problems are being exacerbated by sellers having perhaps only one grade available, such as SN 600 or SN 150, meaning they cannot fill orders for a full slate of grades.

The market is waiting to see where sellers will pitch numbers during this month, with some parties calling for numbers that would be lower than feedstock prices.

Bright stock availability is still relatively tight, and this grade maintains a larger premium than light and heavy solvent neutrals, where prices are collapsing. Prices for solvent neutral grades are taken lower, especially for potential export offers, which may or may not happen. Pan-European prices dropped for solvent neutrals but held steady for bright stock except where buyers are prepared to take large quantities of neutrals, in which case bright stock price tags can be trimmed.

Group I
Exports, FOB
SN 150: $635/t-$675/t
SN 500: $700/t-$725/t
Bright stock 150: $1,155/t-$1,195/t

Northwestern Europe, FCA Antwerp-Rotterdam-Amsterdam
SN 150: $785/t-$810/t
SN500: $865/t-$900/t
Bright stock 150: $1,275/t-$1,325/t

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

Pan-European, FOB/FCA basis
SN 150: €62/t5-€675/t
SN 500/600: €700/t-€745/t
Bright stock 150: €1,085/t-€1,120/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 exchange rage to the United States dollar was at $1.16233 Monday.

European Group II prices are under downward pressure but remain higher than in areas such as the U.S. and Asia-Pacific. Buyers are very much aware of collapsing values for Group I base stocks, which increase the differential between the two API group types. They are also quick to suggest that any differential between the two base oils should be preserved and be fluid, meaning Group II prices would follow Group I rates downward. Buyers acknowledge that they expect a premium to be applied for Group II base oils, but they balk are recent levels.

Given that we are now into December, demand for Group II base oils seems to be weaker, with blenders around Europe all agreeing that they will take only contracted or agreed quantities through December and will not be coerced or persuaded to purchase additional material.

Prices are lower for December.

Group II
Imports, FCA basis
110N: €845/t-€865/t
150N: €855/t- €885/t
220N: €875/t-€895/t
600N: €965/t-€1,010/t

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

The numbers above are subject to selective discounts, depending on buyer reputation and quantities being purchased. 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, but smaller quantities are being imported in flexi-tanks.

Group III base oils around Europe are seeing positive demand, especially for 4 centiStoke, while 6 cSt and 8 cSt remain available. However, no spot sales were reported for the 4 cSt grade since all available material has been allocated to customers by distributors.

Cargoes continue to arrive during December, adding to availabilities. Cargoes for one seller, S-Oil, will continue to arrive into Europe from South Korea until production comes onstream at the Yanbu, Saudi Arabia, plant of sister company Luberef.

Increasing production will be crucial for the European Group III market. Future additional barrels will come from Saudi Arabia and two Group III projects underway along the U.S. Gulf of Mexico coast, as is the Shell project in Wesseling.

Prices for Group III oils with partial slates of finished lubricant approvals face downward pressure but are unchanged this week. A South Korean supplier was heard offering discounts $50/t lower than the low end of the ranges shown below, while small quantities were heard going for $10/t-$20/t above the low end of the ranges.

Group III
Partial approvals, FCA Antwerp-Rotterdam-Amsterdam, 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.

Prices for rerefined Group III are unchanged at €885/t-€920/t for 4 and 6 cSt, on an FCA basis Germany.

Baltic Sea
Domestic Russian SN500 prices had reportedly moved upwards by $10/t, and then it was heard that prices had dipped by $5/t. Basically, it is difficult to grasp what is happening on Russian base oils either in the domestic market or on an export basis, which may not exist at the moment.

There has been no mention of export prices or cargoes leaving the Baltic. There are currently no Russian offers for Nigeria, and no material moving into Turkey. The assumption is that Russian refineries are reserving supplies to domestic or internal users dependent on these supplies. Reports of Russian base oils being illegally used to blend lubricants in some regions of the Baltic appear to have ceased.

Ukrainian drone strikes on Russian refineries and storage complexes may be taking their toll on production of petroleum products, base oils being only one of these products. Rumors 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 embarrassing for the Kremlin.

With no new information notional prices remain as previously reported.

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

Black Sea & Turkey
No more Russian base oil cargoes have been seen or reported moving into any Turkish ports, and local sources say Russian base oils are no longer available. This backs up the theory that Russian base oils are staying in Russia.

Rosneft’s last recorded/noted CIF/CFR price levels were at $590/t for SN150 and $635/t for SN500. These are no longer valid but are reported for historical interest.

Group I
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

No further news has been gleaned regarding the “buy” tender for Petrol Ofisi. This happens from time to time and would not be unusual, but previously this company has issued buy tenders for various quantities of different base oils only to decline to purchase. It may be a price-checking exercise.

Having applied a surprise cut in prices a couple of weeks back, Tupras has now increased prices.

Spindle oil: Tl 32,090.00/t plus VAT Tl 8,315.44/t
SN150: Tl 27,764.00/t plus VAT Tl 7,450.24/t
SN500: Tl 34,443.00/t plus VAT Tl 8,786.04/t
Bright stock: Tl 51,258.00/t plus VAT Tl 12,149.04/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: $1,135/t
150N, ex Taiwan or Saudi Arabia: $1,020/t
500N/600N, ex Taiwan or Saudi Arabia: $1,240/t

Group III
Partly-approved
Tatneft 4 cSt FCA: €893/t (product might still available but prices have increased again)

Fully-approved
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, Saudi Arabia. Cargoes of around 18,000 ton in total are mainly bound for the West Coast of India and the UAE, but there have been some smaller parcels loaded for Aqaba, Jordan, Alexandria and Karachi.

Latest reports give information that a turnaround is underway at Luberef in Yanbu. The closure started in mid-November and will run till the end of December for a 45-day period.

No Group I and Group II base oil cargoes have arrived during last week at UAE ports. Only two cargoes were reported during November. A parcel of 8,000 tons of Group I eventually berthed in Hamriyah port after considerable delay. This parcel came in from Rayong, Thailand. Another cargo loaded in Ulsan, South Korea, carrying around 10,000 tons of Group II.

European sellers are theoretically investigating export cargoes to the UAE, but cargo economics are weighted against this trip due to high freights and longer voyage times going around the Cape of Good Hope. The FOB prices would have to come in exceptionally low, possibly at levels unacceptable to sellers.

Other than rubber process oil, there have been no Iranian base oil exports. No base oil cargoes have been loading from Bandar Imam Khomeini. Sources have explained that some Group I base oils are being delivered by road through Iraq into Syria and Turkey as alternative markets.

Rubber process oil is being exported to Indian receivers in Mumbai and Haldia. A total of 13,000 tons was delivered during October, bringing the total this year to 30,000 tons. A number of Indian buyers are dependent on Iran for supplies of this product, which is used extensively in India in the tire industry.

Although not specifically a base oil, rubber process oil is an important export for Iran. Traders take deliveries into Ras al Khaimah, UAE, then sell into India or sometimes South Korea on a CIF delivered basis.

Iran’s domestic Group II production is being distributed only within the country and does not form any export trade. Imported Group II and Group III base oils also move into Iran through traders based in the UAE and India.

No Russian cargoes have been notified arriving into the UAE, reinforcing the probability that base oils from Russian refineries are being allocated to Russian domestic markets. This report has been trying to establish what is happening to blenders who used Russian base oils previously but has come up against a brick wall so far, with those known to have been importing and using Russian base oils in blends unwilling to discuss the matter.

Prices for base oils imported into the UAE remain 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 have been purchased from traders based in the U.S. and also directly from producers in Thailand, some of whom have representation in UAE.

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

Group II base oils are imported into the UAE from a number of sources – 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 from U.S. and Far East majors and traders. The high ends of the ranges refer to material being delivered by RTW around the UAE and into northern Oman.

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

MEG Group III base oils produced in Al Ruwais and Sitra and are delivered by sea into Hamriyah, Sharjah port and Jebel Ali in the UAE. These base oils are offered for resale through the appointed distributors. 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 a further charge of between $20/t-$55/t, depending on delivery location and quantity.

Netbacks for Group III base oils loaded ex Sitra, Bahrain, and Al Ruwais, UAE, 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. With little change in selling prices in known markets, netbacks are retained at existing levels.

Netbacks for gas-to-liquids Group III + base oils ex Ras Laffan, Qatar, remain at $1,085 and $1,100/t. These levels are indications only since there are no distributors involved and the product mainly is retained by Shell in-house.

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

Africa

The cargo of 3,000 tons of bright stock that recently loaded out of Yanbu has discharged in Alexandria for EGPC. A small cargo loaded out of Alexandria for receivers in Turkey was discharged in Aliaga.

The large cargo that loaded out of Rotterdam and Fawley, U.K., which was first reported as sailing to Durban for discharge, appears to be fixed for a voyage to Singapore, hence another vessel may still load during December for Durban. Shipping reports carry no news of another large vessel for this charterer, but more information may come from shipping agents in Durban during this week.

A cargo of around 10,000 tons of Group l base oils has loaded out of Fawley and will deliver 5,000 tons of SN150, SN500 and bright stock 150 into Tema, covering the Ghana tender. The remainder of the cargo will be discharged in Abidjan, Cote d’Ivoire, and Conakry, Guinea.

There are no current offers for Russian base oils to go into Nigeria, with regular receivers of Russian barrels looking elsewhere for alternative supplies of Group I. With no base oil cargoes coming out of Russia, there may be a permanent break in suppliers such as Lukoil and Himbalt sending base oil cargoes to Apapa from the Baltic.

One cargo that has discharged was 10,000 tons, purchased by a European trader from Phillips 66 along from the U.S. Gulf coast. This cargo finished discharging during November.

Another cargo loaded from PBF in Paulsboro, New Jersey, U.S., with 10,000 tons of SN150, SN500 and SN900. This cargo was supplied at very low prices by a European registered trader with representation in UAE. Another 6,000-ton cargo loaded out of another U.S. Gulf source and may contain Group II base oils.

There are now few available barrels around the U.S. market, so some traders are looking at European supplies, but prices would have to come into line with current levels. Cargoes from the Red Sea and Asia-Pacific are uneconomic and unworkable with difficult vessel fixtures. It is hard to see where any additional cargoes can be sourced. Some have mooted that South America could be a source, but Group I base oils are currently being imported into Brazil and Argentina, so it is difficult to make economic sense of any exports from the South American Atlantic seaboard.

The peak season is about get underway in Nigeria, but reports are that importers do not seem to be concerned regarding building stocks and are still looking for lower prices to purchase large quantities of Group I.

Offer numbers from buyers are $825/t for SN150, $925/t for SN500 and $1,030/t for SN900, on the basis CFR Apapa.

The black market exchange rate for the Nigerian naira was NGN1,446 to the dollar Monday.

Group I
Russian origin (currently unavailable but cited to beat down prices)
SN150: $840/t
SN500: $900/t
SN900: $970/t

U.S. Origin
SN150: $840/t
SN500: $930/t
SN900:$1060/t

Levels have dipped again as a result of rogue traders offering low levels to attract buyers without having any cargo back up from producers.

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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