EMEA Base Oil Price Report


Base oil markets have entered a period of stability across Europe, the Middle East and Africa, with good availability for all types and grades but no glaring oversupply situations.

Demand waned the past week due mainly to the onset of the holiday period, and after a mini buying spike that saw European buyers take advantage of low prices to build inventory for late August.

The quiet period typically sees numerous blending plants temporarily close or reduce hours, sometimes to allow for equipment maintenance.

API Group I supplies are in balance with demand, except that a number of suppliers are openly advertising availability of large slugs of bright stock. Group II prices have flattened with ample availabilities and no signs of further deep discounts. Group III still suffers from a potential over-supply, but sellers and buyers agree that nothing egregious exists at the moment.

Trade of all grades will slow down over the next few weeks, but production will continue, meaning larger quantities may be moving by the end of August. Prices could face downward pressure from this rise in availabilities, although producers insist that they have this situation managed and that no sudden glut of material will appear.

Dated deliveries of Brent crude rose a few cents during the week to post yesterday at $63.65 per barrel for September front month settlement. West Texas Intermediate has also steadied and posted at $56.80/bbl, also for September front month. ICE LS gas oil was at $589 per metric ton for August front month. These prices were obtained from London ICE trading late Monday.


Prices for Group I exports from Europe are slightly firmer in offers this week, particularly at the lower end of the spreads. These levels have not been confirmed as completed deals but may reflect seller attempts to impose markups during a quiet spell in the market – a strategy sometimes seen in times gone by. Some reportedly claimed to be tight on avails of solvent neutrals SN150 and SN500, although a steady stream of offers has been heard for all grades from the main outlets.

Solvent neutral is priced between $575 per ton and $598/t, while SN500 is at $580/t-$605/t and bright stock dipped to $690/t-$720/t. Sellers are looking to target export trades of heavy-viscosity Group I into West Africa and the Middle East Gulf, but they may face aggressive pricing from alternative sources such as Russia and the United States.

The above price levels refer to large parcels of Group I base oils sold on an FOB basis ex mainland European supply points, always subject to availability.

Prices for Group I sales within Europe were described as stable, although buying has virtually ceased. Contracted deliveries will still be made to blenders that allow them during August. The differential between intra-regional and export pricing widened marginally due to firmer export levels and is now assessed at 55/t-85/t.

Group II prices have settled around the levels mentioned last week, with no further efforts to pass along hikes in source markets or to apply discounts to win new business. There may be more action to come from Far Eastern sources, where prices are weakening and 500N is being quoted at lower levels than 150N. With a potential over-supply in that region, more material may be targeted at the lucrative European markets where Group II is expanding in popularity with traditional blenders.

European Group II base oil prices are maintained at previous levels, even as the Euro strengthens versus the U.S. dollar. FCA numbers are $720/t-$815/t (640/t-730) for 100 neutral, 150N and 220N and $750/t-$825/t (665/t-740) for 500N and 600N.

These prices pertain to all Group II base oils, including those with full slates of finished lubricant approvals and smaller import parcels in flexitanks.

Group III activity has slowed although demand continues to grow. The market remains extremely competitive, and whilst OEM approvals are important, price remains the ultimate tool in establishing a market share. Values for oils with partial approvals are unchanged at 665/t-710/t for 4 centiStoke grades and 675/t-720/t for 6 and 8 cSt, all on an FCA basisex hubs in Northwestern Europe.

Prices for fully-approved Group III oils are also unchanged at 710/t-840/t for 4 cSt oils, 800/t-865/t for 6 cSt and 775/t-835/t for 8 cSt, FCA Antwerp-Rotterdam-Amsterdam.

Baltic and Black Seas

Baltic trade continues to be a shadow of its former self with fewer cargoes moving through the various shore storage plants in Riga, Liepaja and Ventspils, Latvia. Even a major supplier located in Svetly, Kaliningrad oblast, Russia, has opted to move material from their refineries to more attractive markets in Ukraine and Eastern Europe. The reported mini revival of trade appears to have been just that, with only one small cargo reported moving from the Baltic to the east coast of the United Kingdom and another 4,000 ton parcel under contract moving to Antwerp-Rotterdam-Amsterdam. No further talks have been heard of another Nigerian cargo.

There have been instances when material from Northwestern Europe and Poland travels to Baltic ports to cover local blending in Lithuania and Latvia, such is the dearth of Russian exports being made available at the low bid prices from players in the Baltic.

Prices are unchanged at $475/t-$500/t for SN150 and $485/t-$520/t for SN500. Polish bright stock is indicated lower this week, now at $685/t-$710/t, FOB Gdansk.

Black Sea sources report continuing interest from buyers in the United Arab Emirates and India to procure large parcels of Russian Group I base oils through the STS facility at Kavkaz, Russia. However, the strange fact remains that prices from this source appear to be moving lower to accommodate a satisfactory level of throughput.

STS prices at Kavkaz are now as low as $465/t for SN500 and $448/t for SN150. These levels are well below European vacuum gas oil, which may indicate that feedstock costs are allocated differently in Russian refineries, assuming that margins are still positive by moving these quantities. Various inquiries being floated for material sourcing from Kavkaz for cargoes of 5,000 to 18,000 tons for destinations such as the U.K., Rotterdam, the U.A.E., the West Coast of India and Singapore.

The Turkish market remains confusing amid reports of buyers opting for Group I material from the local Izmir refinery over imports from the Mediterranean. The offtake has been slow enough, though, for the refinery to offer a bulk export cargo of 5,000 to 6,000 tons. Another Russian parcel is also on offer for 5,000 tons of two Group I grades to ship to Derince, Turkey.

Greek and Italian sellers continue to make offers to Turkish receivers. Prices for Group I sold on a CIF basis in Turkey ex Mediterranean sources remain at $590/t for SN150 and $585/t for SN500. SN600 is offered at around $600/t, and bright stock is indicated at $765/t CIF.

Group II and Group III base oils are offered from Far East sources directly to blenders in flexies, these supplies being an alternative to material available ex tank from appointed distributors.

Middle East Gulf

There are no reported Red Sea cargo movements this week, although a number of vessels are already lined up to load during August from Yanbual Bahr and Jeddah, Saudi Arabia. Cargoes of both Group I and Group II base oils are programmed to load for receivers in India and the U.A.E.

The stand-off between U.K. and Iran over the arrests of ships in Straits of Hormuz and Gibraltar continues without apparent progress toward a resolution. Iranian base oils continue to appear in the U.A.E. market, although no official channels can be established to confirm quantities of Group I passing through the southern ports of Bandar-e Emam Khomeyni and Bandar Bushehr. U.S. and U.K. sanctions are only effective in creating clandestine movements of base oils out of Iran, which are being re-exported on occasion from U.A.E. ports. Base oil exports are no longer reported in the normal way, although local sources claim that premium SN500 is priced around $590/t or the equivalent in local currencies.

Russian offers for exports from Kavkaz continue to be targeted at receivers in the U.A.E., reportedly priced at around $542/t for SN150 and $557/t for SN500. Given FOB levels and freight costs associated with a cargo of around 10,000 tons, these prices are attractive to sellers and receivers.

Group III shipments from Al Ruwais, U.A.E., appear to have slowed for August due to a maintenance shutdown. Ample stocks of have been laid up to continue supplying markets in India, the Far East, Europe and the U.S.

Prices for partly approved oil loading out of Sitra, Bahrain and Al Ruwais are again unchanged at $685/t-$725/t for all three grades, basis FOB. Eight cSt grades moving to India and China will achieve lower contribution levels due to lower local selling prices. Nexbase-branded oils ex Sitra, which carry a full slate of approvals, should attract higher FOB levels and are notionally unchanged at $700/t-$865/t for all three grades, delivered into European and U.S. markets.

Nominal FOB prices on a netback basis are based on prices derived from regional selling levels, less marketing, handling and freight costs.

Group II oils within Middle East Gulf regional markets were marked down lower due to prices from Far East sources. Prices are now at $775/t-$880/t for 100N, 150N and 220N and $785/t-$900/t for 500N and 600N, all on an FCA basis ex U.A.E. hub storage.

Regarding Group II imported from Far East sources, some of these prices are possibly competing with Group I base oils, particularly for light neutrals and the light Group II grades.


South African buyers have issued a number of inquiries to traders for Group I base oils to be imported into that market during September, possibly to fill a shortage caused by a maintenance turnaround that is lasting longer than planned at a local refinery. Cargoes loading out of Rotterdam and the U.K. are programmed to arrive into Durban during September or October. Shipping sources in Durban report parcels of 8,000 to 12,000 tons of Group I, II and III being considered.

Mediterranean and North African trading includes an increasing number of cargoes moving into Israel after the suspension of production at the refinery in Haifa last year. A variety of grades are being shipped from sources in the Far East, the Mediterranean, Northwestern Europe and the Balck Sea. There are also reports of shipments into Morocco and Egypt, mainly of Group I.

West African sources report a 15,000 ton cargo of Group I grades loading out of the U.S. East Coast for Apapa port in Lagos, Nigeria, due to discharge during September. The exact composition is not yet known, but a typical shipment from this particular refinery usually includes SN150 or SN180, SN500 and bright stock. This shipment follows another large parcel from the same source being supplied to receivers on the West Coast of India.

There have been no further bulletins regarding cargoes to be loaded out of the Baltic, although there were suggestions this week that shipments from Kavkaz may be re-examined in light of prices there. Availability of heavy Group I grades may be insufficient, but a two-port loading could be considered.

Prices for material discharging into Apapa are assessed at levels similar to last week: $685/t-$710/t for SN150, $695/t-$720/t for SN500 and $885/t-$925/t for bright stock. SN900 is indicated at $710/t-$720/t.

These ranges cover all specifications of base oils including those requiring a viscosity index of at least 95. Some blenders have this requirement for SN150 and SN500, and oils meeting it are priced at the higher end of the spreads.

All prices are on the basis of CIF/CFR Apapa and refer to cargoes of at least 10,000 tons landed into Nigerian ports. Smaller cargoes such as the 7,000 tons that loaded out of the Baltic a couple weeks ago, will have relatively higher prices due to freight.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly atpumacrown@email.com.

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