EMEA Base Oil Price Report


Weather-related disruptions in Texas have caused a perfect storm for the base oil industry as new problems at multiple refineries exacerbated existing shortage caused by the impacts of COVID-19.

Looming maintenance shutdowns in Europe and East Asia could make the situation even worse, potentially destabilizing and derailing any post-pandemic recovery.

Basically there is currently not enough base oil to cover even the reduced level of base oil demand caused by the pandemic, and in the few locations where there is availability of base oils, they are either in the wrong place or are in insufficient quantities to cover requirements.

Refiners are unable to build stock reserves in anticipation of planned maintenance due to heavy demand from existing and new customers, many of whom are looking at all alternatives, particularly for the heavier API Group I grades.

At the same time Group II is experiencing limited spot availability, with whatever material is available being soaked up by blenders who cannot get enough Group I. API Group III is basically short, with producers of these grades unable to keep up with demand. Producing refineries are running at maximum rates to supply ever increasing demand.

Inevitably prices keep rising, with some sellers instigating regular monthly, or even bi-monthly, increases, some of which have been measured in the hundreds rather than single or double digit increases.

Given the extent to which refiners reduced operations – to cope with lower demand for motor fuels – there are holes appearing in the supply chain which cannot easily be plugged, hence the global base oil industry is facing some major challenges.

To add to the raft of problems facing the oil industry at this time, crude oil values have been climbing to new highs as some key countries, such as Saudi Arabia and Russia, continue to limit supplies to crude oil markets. Dated deliveries of Brent crude now sit at $63.45 per barrel, $3 higher than last reported, for April front month settlement. West Texas Intermediate crude has followed the upward curve, recording at $59.80/bbl, also for April front month.

ICE LS gas oil prices are higher, up by more than $30 per metric ton, to post at $520 per metric ton for March settlement. These prices were obtained from London ICE trading late Monday.


Prices for Group I exports from Europe are continuing to rise in response to exceptional demand and lack of availabilities. Prices remain substantially above values within the region, and with plant maintenance starting to kick in, the market is set for a tumultous next few months. With two refineries in Poland and one in Hungary going into turnaround, planned maintenance starting in France, Spain and Italy, the market can only get shorter before these units complete all the work being undertaken. Around 50% of European production of Group I base oil will be taken down at some time during the first six months of this year.

Some majors are looking to rebalance inventories in other parts of the world, in Singapore for example, where a major refinery has not yet restarted. The situation in North America may bring hasty changes to logistics and plans for European coverage of ongoing global supplies, and any ‘spare’ European production of Group I grades may start to move to U.S. locations to potentially cover for lost local production, at least in the short to medium term.   

Prices have firmed by $30 to $75 per ton over the past weeks with the heavier neutrals being less available and more in demand. Solvent neutral 150 prices are now ramped up to between $800/t and $850/t. SN500 has moved upwards to $875/t-$920/t. Bright stock, being exceptionally hard to find in large quantities and an offer heard last week contained a price of around $1,075/t. The bright stock price range is now therefore assessed between $1,065/t-$1,100/t.

Some sellers have been keen to offer smaller availabilities to export markets such as West Africa and Middle East Gulf in flexi-bags, since higher numbers can be attained for these quantities. Lots of up to 3,000 tons of a mix of Group I grades have been offered at a premium of around $50/t to the mid points of the prices above for quantities delivered in flexies.

The above Group I export prices refer to cargo sized (minimum 2,000 tons) parcels of Group I base oils, FOB ex mainland European supply points, always subject to availability.

Regional or domestic prices remain lower than export levels, although sellers have been keen to discuss higher levels for March, some of the increments may bring local prices into line with export numbers. With current prices being some $35/t-$65 lower than export offers, sellers may not have to push hard the gain acceptance to higher levels starting from March 1. Some suppliers have indicated that they want to re-establish a premium over export prices for domestic supplies of Group I base oils, but this is unlikely since buyers are unwilling at this time to even look at incurring higher costs for March.

In spite of Covid restrictions dampening buying activity this remains a sellers’ market where buyers are effectively bound by current contract arrangements.

Many long- term contracts are index linked and are based on export price formulae, hence this situation has been causing many operations to pay higher levels than would otherwise be the case for spot purchases. The facts are that there are few avails for spot deals, hence buyers are rather tied to existing arrangements.

Those looking around for alternative sources for Group I base oils have found few, if any, acceptable alternatives to their long term suppliers.

The differential between export and domestic pricing is maintained, but on the pretext that prices will be generally higher from March 1, the indication being that both export and domestic price levels may come into line. At the moment the differential is assessed between €35/t-€55/t, export levels being higher.

Group II prices are predicted to rise further, possibly due in no small way to the supply vacuum which has been created by the severe weather in North America and the cessation of production and supply of all base oils at many prime sources. This of course includes production of Group II base stocks which will have to be supplemented from other supply points in the meantime. With the European market already showing signs of a further tightening in availabilities, and a limited number of possible supply sources, this could lead to shortages in markets across Europe and Middle East Gulf.

Apart from the North American situation, markets throughout Europe have seen demand rising for Group II grades, whether this is as a result of the dearth of Group I grades and Group II being sought as an alternative, or whether the increasing demand is weighted towards higher ACEA requirements for finished lubricants with new legislation being reviewed towards the Q4 of this year.

Some blenders are looking to use more Group II grades due to non-availability of both Group I and Group III base stocks, and have been reviewing formulations with additive suppliers and OEMs to move to an optimum blend scenario.

Prices are raised to new levels this week, and may be also reviewed again from March 1, with levels now being assessed at $905/t-$965/t (€740/t-€805) for 100 neutral, 150N and 220N, while 600N is at $975/t-$1,040/t (€810/t-€865).

Prices are in respect of a wide range of Group II base oils, including European, and U.S. fully approved grades, but also unapproved or partly-approved grades from Middle East, Far East and U.S.

European Group III markets are exceptionally tight with the looming turnarounds for two large producers and suppliers of fully-approved Group III grades just around the corner. These sources have announced that coverage of supply will be covered from stocks built up prior to the curtailing of production. Already these suppliers are administrating allocation programs to current contracted buyers, and this limitation to supplies is set to continue at least until post turnarounds. There are no spot avails of fully-approved Group III base oils anywhere around Europe.

Demand is sure to increase for Group III, although it is not easy to see where further supplies of these grades would emanate from, since all current suppliers are at full tilt in supplying whatever they can make available from production. This year could see further conversions from partly-approved Group III base to oils to fully-approved status. The suggestion that these oils could then be sold at a premium will possibly not apply since there has been a leveling out of differentials with the supply situation becoming tight for both classifications of Group III base oil. 

Prices are firmer with no spot availabilities for March and even into April. Offer levels are heard between €855/t-€925/t in respect of the range of partly-approved Group III base oils. Levels are assessed between €875/t-€925/t for the 6 cSt and 8 cSt grades, with 3cst and 4 centiStoke between €850/t-€910/t. Prices are in respect of FCA supplies ex northwestern European hubs.

Group III base oils which currently hold full European OEM approvals are now priced between €925/t-€1,000/t in respect of 4 centiStoke base oils, with 6 cSt and 8 cSt grades between €980/t-€1,175/t.

Baltic and Black Seas

Baltic supplies of Russian export grades improved over the first few weeks of 2021 with distributors targeting distant export markets such as Singapore and the U.S. where prices can be higher. The traditional export markets such as Antwerp-Rotterdam-Amsterdam, Scandinavia and the United Kingdom appear to have been replaced, to an extent, by these long-haul cargoes. They tend not to be large slugs but smaller parcels of around 3,000-6,000 tons.

The major Russian supplier working out of the Baltic and Black Sea elected to send a large parcel of around 12,000 tons from Kaliningrad to Gebze, Turkey, instead of loading the quantity from the STS facility in the Black Sea at Kavkaz, Russia. Suggestions are that the river system into the Black Sea may be iced over, hence the logistical turnaround. Another factor could be the decreased quantities of Group I grades coming out of the Volgograd refinery due to the current expansion of a Group II unit.

Resellers and distributors are trying to source more Russian export barrels, somewhat unsuccessfully so far, with Russian refiners all set for a start to the turnaround season. Some four refineries will probably lose some production between now and the middle of the year, keeping the supply situation in the Baltic relatively tight.

One other Antwerp-Rotterdam-Amsterdam cargo moved into Dordrecht from other Baltic distributors during the first few days of this month. Additionally, a medium sized cargo was bought from Gdansk for receivers in Gebze, Turkey. This parcel of some 2,500 tons of API Group material is considered to be a cargo of bright stock, which may not have been available from the usual sources in the Mediterranean. 

FOB prices rose for material loading out of the Baltic, although the small number of spot cargoes dwindled.

Levels are assessed at higher numbers, with SN150 at $720/t-$750 per metric ton, SN500 around $810/t-$825/t, with minimum 95 viscosity index bright stock at $1,025/t. Blended SN900, if available, is priced around $865/t.

The Kavkaz, Russia, STS facility In the Black Sea has been quiet. That is perhaps due to weather constraints or to reduced output from the southern refinery, where a new Group II plant is being commissioned.

STS prices have moved higher, with levels established around $770/t-$810/t for SN500, with SN150 at around $680/t-$720/t.

Group I grades from the Italy and Greece going into the Turkish market have risen sharply due mainly to the lack of competition from the local refinery at Izmir. Traders have been supplying more cargoes from Mediterranean sources since the Tupras refinery was down for maintenance, and will only restart at the end of February.

The supplier increased local prices by some $80/t-$90/t, bringing the SN100 to $900/t, SN150 to around $865/t, with SN500 at $915/t whilst bright stock rose to $1000/t. These prices are net FCA, with a loading fee of $16/t to be added.

Group I base oil prices out of the Mediterranean are maintained at around $855/t for SN150, with SN500 slightly higher at around $910/t.

Prices for Group II and Group III base oils sales FCA Marmara ports are higher and are now placed at €825/t-€865/t for low vis Group II grades, with the higher vis 600N at €925/t-€955/t.

Group III grades are assessed at €925/t-€1,095/t for 4 centiStoke material, with 6 cSt grades at €945/t-€1,175/t, and 8 cSt material at €940/t-€1,160/t. The ranges for ex tank prices vary tremendously, depending on supplier and the specification.

Middle East

Red Sea reports fewer large cargoes loading out of Yanbu’ al Bahr and Jeddah, perhaps as a result of the turnaround that is soon to be completed at Yanbu. This may have curtailed the export of Group I and Group II base oils from the Kingdom.

Middle East Gulf reports suggest that some minimal Iranian trades were completed, supplying some blenders in the United Arab Emirates with heavy neutrals. Other buyers in the U.A.E. have avoided using Iranian supplies, either on a quality basis or more prevalently, on political reasons. Iranian prices are assessed at around $845/t, basis CFR Mumbai anchorage, this number yielding an FOB level at around $795/t-$810/t, depending on cargo size and freight rates.

Group III base oils from Al Ruwais in U.A.E. and Sitra in Bahrain have notional netbacks assessed higher. The increases are being aligned and compared to higher selling prices in export destinations in Europe, India, China and the United States. Netbacks are indicated at $895/t-$920/t for 4 centiStoke, 6 cSt and 8 cSt partly-approved Group III base oils. The range of fully-approved grades from Bahrain will yield higher netbacks due to the pricing differential in export markets. These grades may netback at $975/t-$1,125/t for the 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 FCA U.A.E. storage are raised from March 1 and are in ranges at $945/t-$965/t for light vis grades 100N, 150N and 220N, with heavier 500N/600N grades at $1,070/t-$1,100/t.

The wide range takes account of various base oils supplied from different sources such as Far East and Red Sea, and which have been delivered into U.A.E. in both bulk and in flexies, with varying contract terms and selling conditions.


The large South African cargo that completed loading out of Rotterdam and the United Kingdom with shipping sources indicated arrival into Durban with 12,000 tons of various base oil grades. The estimated time of arrival is March 25-31.

West African trades appear to have slowed, with reports that Nigerian buyers are querying the new higher prices that are offered to cover new higher FOB numbers and freight rates. They obviously require the product to cover blending operations in the country, but with the higher prices comes higher selling levels for finished lubes. This is proving difficult in a market that saw prices for base oils rise by more than 130% over the last six months.

The Greek cargo is on the high seas and should discharge in Apapa around mid March. Sellers are eager to point out that this cargo was negotiated some couple of months back when prices were much lower, and that current offers are probably in the region of $150/t-$200/t higher.

CFR/CIF levels for Group I base oils landing into Apapa in Lagos are now placed at $895/t for SN150, SN500 at $965/t, with higher specification SN900 with VI min 95, at around $995/t. Bright stock is unavailable.

However, cargoes loading forward from today’s date will have offers of around $975/t for SN150, SN500 at around $1,045/t, SN900 around $1,085/t and bright stock, if available, at around $1,225/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.

Historic and current base oil pricing data are available for purchase in Excel format.

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