EMEA Base Oil Price Report


The base oil scene is taking on the role of a balancing act on global basis. A number of arbitrage opportunities opening up may have the effect of increasing availabilities in tight markets, which may ultimately put pressure on prices to weaken. At the same time these opportunities may also deplete supplying sources, which may stabilize prices in those regions.

The arbitrage varies depending on type of base oil, but certainly there is scope for supplies from areas such as the Baltic to supply into regions such as the U.S. whilst at the same time Asia-Pacific sources have an open arbitrage for some grades such as API Group II and Group III for supply into both Europe and the United States.


The European markets are mixed, with Group I prices declining from the June high points, while Group II and API Group III supplies and prices are holding firmer and remain closer to the highs witnessed in June. Prices in June this year ended a yearly climb in numbers that ultimately saw the highest prices for base oils for all time.

The COVID-19 situation in some of the main markets resulted in refineries remaining cautious regarding upping their run rates to produce more transportation fuels, since demand is still tentative for motor gasoline, kerosene and diesel presently. This is curtailing further supplies of feedstocks for base oil production; however, this has to be weighed against weaker demand for base oils due to seasonality and the coronavirus situation. The overall scenario is one where base oils are increasingly available in key markets, thus moving price levels lower.

Crude oil levels dropped during the past week due to higher U.S. inventories and the suggestion of weaker demand forecasts for principal markets in China, India and Europe. Levels receded considerably early this week, with dated deliveries of Brent crude moving lower to post at $68.55 per barrel, lower by some $5.50 than last reported two weeks back. This price is now for October front month. West Texas Intermediate crude also reacted to lower demand calls and now stands at $66.15 per barrel, this price still for September front month.

ICE LS Gas Oil prices dipped drastically in the wake of the crude downward trends posting at $561 per metric ton, lower by around $40/t from the level reported a fortnight ago for August front month. 

Prices were obtained from late London ICE trading on Aug. 9.

European FOB export prices for Group I base oils fell again this week, particularly for the range of solvent neutrals. This month is lining up to be the quietest in demand terms for some time, with many buyers remaining cautious, ever conscious of the possibility that prices may tumble further.

Evidence from last week is that prices may be starting to find a natural level, moving towards stability and also taking into account prices offered for Group II supplies. Suppliers are reigning in discounts, trying to hold on to numbers at their higher levels, but this has not always been possible, with buyers looking for September barrels at considerably lower prices. There appears to be an impasse at the moment, with buyers looking for lower offers and sellers not in any rush to offer prompt discounted deals.

Prices for August supplies of SN150 are down some $10/t-$30/t lower at $995/t-$1,050/t, whilst SN500 has moved downwards and is now assessed at $1,510/t-$1,560/t.

Bright stock remains tighter although demand for this grade has not been so evident over the past ten days or so. Prices are now established at $1,865/t-$1,895/t.

Domestic European markets also came off again this week with lower numbers, perhaps due to weak demand from buyers, many of whom are on vacation during August. Demand is down on two counts. One, the ever present threat of a return of COVID-19 to the key regions and also the predictable seasonal slowdown. Regional markets are following a forecast trend for this month, with prices remaining reasonably static, with very little action reported around the market.

Comments received last week from a number of blenders suggest that buyers are looking for lower numbers moving into September and beyond, with increasing availabilities due to lower turnaround impact and perhaps a return to higher refinery run rates.

The differential between export and domestic are narrowed a little this week, assessed at €25/t-€55/t, domestic numbers remaining the higher.

European Group II prices are steady with prices being talked for September supplies around the same levels as at the end of July. The market remains relatively tight and with high demand in the U.S., imports from those sources are distinctly lower than last year.

Another major factor affecting imports from non-FTA sources such as the U.S. is the news issued last week that the EU Commission will cut the import levy quota from 150,000 tons during the second half of 2021 to 75,000 tons for the first half of 2022; thereafter, the quota is to be abolished.

This effectively means that importers of Group II grades 150N, 220N and 600N will incur duty of 3.75% on any and all products brought into the EU. Importers will have an option to negotiate the abolition of the quota, should the 75,000 tons for the first half of next year prove unworkable.

With one large European producer and options for free imports from FTA sources, this could be major stumbling block for imports from the U.S.

There are however plans afoot in Poland for Gdansk refinery to build a new unit producing Group II grades 100N, 200N and 600N. This facility will also produce a higher vis Group II grade which can be interchanged with bright stock. The expansion is scheduled to open sometime late in 2025 or early 2025. The project is also dependent upon the merger of PKN Orlen and the buyout of Lotos, whilst at the same time PKN Orlen as parent, have to sell off 30% of Gdansk refinery to private capital to meet EU rules for the merger.

Prices remain relatively firm being assessed slightly lower, with levels at $1,510/t-$1,625/t (€1,270/t-€1,375) for the three lighter vis grades (100N, 150N and 220N), with higher vis grades (600N) at $1,800/t-$1,855/t (€1,540/t-€1,580).

Prices are for a wide range of Group II base oils, including European, and U.S. fully approved grades, but also material from Middle East, Far East and the U.S.

Group III prices are firmer with high demand for these grades throughout the European markets. Even during August there has been high levels of interest to purchase quantities of these oils for the ensuing period up to year-end and beyond. There has basically been an eradication of a spot market with all availability being “allocated” to existing customers on a rolling month by month basis.

With prices for Group III supplies being reported as high in U.S. markets, producers have been keen to maximize supplies to that region, leaving markets in areas such as Europe tighter in supply terms. This dearth of availability will bring pressure to maintain higher prices and perhaps even boost numbers further as demand increases across the European arena.

A Spanish refinery at Cartagena on returning to full production following a turnaround will load some 32,000 tons of Group III grades to various locations during August.

Prices are firmer for September and October with levels now assessed at €1,570/t-€1,620/t for the range of partly-approved Group III base oils. Prices of €1,590/t-€1,620/t are for 6 cSt and 8 cSt grades. Four centiStoke grades are pitched at €1,520/t-€1,600/t. Prices are for FCA supplies from Antwerp-Rotterdam-Amsterdam hubs.

Group III base oils holding full European OEM approvals (such as Volkswagen) have prices hiked to new levels at €1,565/t-€1,625/t for 4 centiStoke base oils, and 6 cSt and 8 cSt grades at €1,625/t-€1,665/t.

Baltic and Black Seas

Baltic prices took a hammering over the past few weeks, and where these prices were in excess of European mainstream levels earlier in the year, they have reversed that trend and are now substantially below already weaker European numbers. Due to lower demand in Russian domestic markets and refineries returning to full production after turnarounds, the region has surplus product to move to any available export or domestic market.

Baltic levels are around $400/t below European export prices and have fallen by some $450/t from the highs established during June.

One cargo is loading this week for U.S. Gulf Coast, taking advantage of the open arbitrage between the Baltic and the U.S. 7.8,000 tons of Russian export barrels will load from one or more Baltic ports before topping off in Rotterdam. The arbitrage between Baltic and the U.S. Gulf is estimated to be around $375 per metric ton.

An interesting point is that with prices dropping significantly in the Baltic there have been no known inquiries for cargoes to load for Nigerian receivers, many of whom are very short of inventory. These may yet come during the second part of August.

FOB prices have dropped, with levels assessed with SN150 at $960/t-$985/t, SN500 at $1,135/t-$1,185/t, with SN900 if available, priced at around $1225/t.

Black Sea activity is remote with few reports of any movements either from Russian ports into Turkey or supplies ex the Kavkaz, Russia, facility for export destinations. Two cargoes are on the horizon for Turkish receivers – the first is a prompt parcel of refined base oils loading from Kalundborg, and the other is a small cargo of 1,000 tons from Cartagena, perhaps topping up distributor stocks for extended sales of Group III grades.

Tupras announced it is shutting down base oil production with immediate effect, and with no disclosure yet as to the length of the suspension to production. This is yet another peculiar move, with local buyers unsure as how this censure leaves them to be covered for ongoing supplies for blending.

The problems caused by the huge wildfires raging across the southeastern part of Turkey are not improving either the economy or lubricant production. The full impact of this disaster has yet to unfold and it may be weeks or months before the whole Turkish economy can get back to some form of reality.

Other than the small Group III cargo there are no Mediterranean sourced movements from Italy or Greece, usually going into Derince or Gebze, Turkey. Mediterranean indications about prices for potential cargoes are assessed lower and are now estimated at around $1,035/t CIF for SN150, with SN500 around $1,520/t.

Prices for imported Group II and Group III base oils are pushed higher, with numbers increasing, especially for Group III supplies which may reflect the small size of the replenishment stock cargo. Prices are advised as maintained for the Group II base oils and are at €1,465/t-€1,485/t for low vis Group II grades, with the higher vis 600N remaining higher at €1,825/t-€1,865/t.

Group III ex-tank sales are priced at €1,640/t-€1,685/t for partly-approved and fully-approved 4 centiStoke material, with 6 cSt and 8 cSt grades at €1,675/t-€1,700/t.

Middle East

Red Sea news contains reports of a resumption of large cargoes loading out of Yanbu and Jeddah for receivers in Mumbai anchorage, and additionally a smaller supply to Jordanian buyers in Aqaba, where two grades will load from Yanbu and Jeddah to cover this supply.

No reported further Iranian cargo movements were advised from Middle East Gulf sources following the 3,000 tons parcel that loaded out of an “Iranian port” to discharge in Hazira.

The tensions that are building between Iran and a coalition comprising of the United Kingdom, U.S. and Israel are yet to reach a critical point following the two attacks on merchant shipping offshore Fujairah and in the Straits of Hormuz. Action is being considered by the three nations at this time, which can only mean further restrictions to Iranian trade.

News from Ian is that the country has a new leader but is suffering with high levels of COVID and a disastrous vaccination campaign, which has all but left the country on its knees. The world awaits to witness the punitive reactions to be taken by the three nations mentioned above with Iran.

Towards the end of this month, a cargo of Group III grades will load out of Al Ruwais for European distribution. At the same time smaller parcel is currently loading to of Sitra, possibly for Stasco, which will sail and discharge in Rotterdam.

Other cargoes continue to load out of Al Ruwais in United Arab Emirates, Sitra in Bahrain, and Ras Laffan in Qatar.

Netback assessments for Group III base oils exported from Al Ruwais and Sitra are increased after prices in export markets such as China, the United States and Europe significantly increased over the past few weeks.

Netbacks for Group III base oils exported from Middle East Gulf are now assessed at $1,635/t-$1,745/t for 4 cSt, 6 cSt and 8 cSt partly-approved Group III base oils. Base oils from Sitra refinery holding full approvals will netback at a higher level due to the pricing differentials in the various export markets. These grades are assessed to netback at $1,675/t-$1,765/t for 4 cSt, 6 cSt, and 8 cSt Group III base oils.

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

Group II base oils imported into U.A.E. from numerous sources in the U.S., Asia-Pacific, Saudi Arabia and Europe, in both bulk and flexies, which are resold on an FCA basis, are maintained with pricing at $1,575/t-$1,685/t for light vis grades 100N, 150N and 220N, with the heavier vis 500N and 600N grades at $1,875/t-$1,920.


South African shipping sources again advised that a further large cargo of base oils and other material will load out of Rotterdam and Fawley with a large quantity of the former to discharge into Durban during the second half of September. The vessel will load over 14,500 tons of total grades.

West Africa has gone quiet with only one European cargo from Livorno on the high seas en route to Apapa, Nigeria. Nigerian buyers remain reluctant to commit to purchasing large cargoes at this time, believing that base oil prices are set to fall further during the course of this month.

Receivers may yet be justified in looking for discounts of up to $250/t-$300/t off last offered prices. With Baltic numbers collapsing it is perhaps surprising that some traders have not yet made to move to at least start discussing levels with sellers, although more than one party is looking at shipping out of Riga, but perhaps into September.

Local blending operations in Nigeria are running short of suitable stocks and are badgering distributors in Apapa to make commitments to purchase base oils on their behalf.

CFR/CIF levels for API Group I base oils, currently programmed to land into Apapa during August, are maintained this week until confirmation of further cargoes are advised and confirmed.

Prices continue to be assessed at $1,765/t for SN150, SN500 around $1,825/t, with SN500 around $1,845/t, SN900 with VI min 95, is priced at around $1,885/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.