Crude oil costs rose some $2 per barrel the past week, perhaps reflecting the international mood about Russian elections and condemnation of the chemical poisoning of a former spy in the United Kingdom, allegedly by Russian connections. Geo-political tensions more and more frequently appear to have an effect on commodity prices, to the extent that simple supply and demand are almost sidelined.

Dated deliveries of Brent crude posted at $66.25 per barrel in late Monday trade for May front month, while West Texas Intermediate crude rose to $62.15/bbl for April front month. ICE LS gas oil moved ahead marginally by some $15 per metric ton to $585/t, now for April front month settlement.

Europe

As mentioned already, Group I export values settled down this week, and some of the extreme highs were discounted by both sellers and buyers. A few hardline sellers are still maintaining higher offers, despite consensus around the market that these are tongue in cheek and do not reflect realistic levels. Prices have firmed at the lower ends of the ranges however, reflecting an overall upward swing the past couple weeks.

Light solvent neutrals are now banded between $795/t and $825/t, while heavier grades such as SN500 are $845/t-$885/t. Bright stock values remain flat at $945/t-$995/t.

It must be emphasized that these prices ranges include both contracted sales and spot availabilities of Group I base oils designated for export from Europe. The above levels also pertain to larger cargo-sized parcels of Group I being offered on an FOB basis ex mainland European supply points.

There was some worry that higher prices and firm off-shore demand could re-route Group I from domestic markets to export sales, leaving the region short. There have been no reports of this happening so far, however, intra-regional buyers may encounter upward pricing pressure when contracts come up for renewal at the start of April.

The differential between export and local sales prices is re-established this week but with a radical change. Export prices are once again aimed slightly higher than local sales, but the differential is reduced to 10/t-45/t.

European Group II markets remain stable to firm, with sellers taking notice of movements in the Group I sector and expressing confidence that their products will continue to sell at a premium to Group I grades. Supply of Group II remains relatively tight, but prices appear unchanged apart from some small adjustments by individual buyers.

FCA values for Group II are assessed at $900/t-$920/t (725/t-740) for light-viscosity oils and $970/t-$990/t (780/t-800) for heavies. Individual customers may see differences depending on a number of commercial factors.

Group III markets within Europe are described as stable to firm as producers and distributors continually trying to maximize prices wherever possible, though not at the risk of losing market share. Values for Group III import remain unchanged at $890/t-$920/t for 4 and 6 centiStoke grades discharging into Northwestern Europe on a CIF basis. Euro FCA sales are around 855/t-870/t for 4 and 6 cSt grades with partial slates of finished lubricant approvals.

It is worth noting that differentials between Group III with full and partial slates of approvals are becoming blurred. Still, oils with ACEA and OEM approvals are assessed at 885/t-900/t for 4 and 6 cSt grades and 865/t-880/t for 8 cSt, basis FCA Antwerp-Rotterdam-Amsterdam. The latter prices are for FCA or truck-delivered Group III sold to local blenders, and do not pertain to material delivered in bulk cargoes to large users such as major blenders or additive manufacturers.

Baltic and Black Seas

Baltic availabilities remain scant as Russian volumes still have not returned to previous levels. Sources said this week that further supplies have been negotiated and that material should start to flow again in larger quantities to the main Baltic supply hubs.

Prices in this region appear to have followed the lead of the European mainland, with threats of significantly higher numbers not coming to pass. Values did rise to reflect the availability situation and also higher refinery gate prices. SN150 is assessed at $720/t-$755/t, SN500 at $785/t-$825/t and SN900 at $865/t-$895/t, all on an FOB basis. Bright stock is more difficult to peg due to the range of products in this category but those available from southern Baltic suppliers in high volumes are at $945/t-$985/t.

Black Sea trade may change dramatically with the announcement that the Turkish refinery in Izmir will be back on stream making Group I for local consumption and purchase in local currency. Cross Black Sea traffic appears to have slowed, with Russian exports being concentrated in STS loadings out of Kavkaz, Russia, instead of the smaller cargoes that traditionally supplied Turkish ports such as Gebze, Izmit and Aliaga.

Cargoes loading STS out of Kavkaz are routinely being assembled for export to the United Arab Emirates, the West Coast of India, the Far East and Antwerp-Rotterdam-Amsterdam, with sellers keen to establish this trade with other regions, where deals may be simpler. The latest inquiry is for a medium-sized parcel of some 6,000 to 7,000 tons to bridge to Rotterdam for onward shipment to South America.

Northwestern Europe and Mediterranean sources are the latest supply points for Turkish and Bulgarian receivers, with a number of cargoes moving from Greece to Izmit and Derince amd further inquiries for Gebze for later this month. Prices for new offers and for material delivered under contract are heard this week to have risen, perhaps in response to index-linked contractual deliveries. Values are suggested but not yet confirmed at $835/t-$860/t for light neutrals and $880/t-$920/t for SN500 and SN600, basis CIF. Group III prices ex Mediterranean and the Middle East Gulf are assessed at $890/t-$920/t for 4 and 6 cSt grades, CIF.

Middle East Gulf

Red Sea trade still features the inquiry for Aqaba, Jordan, which is required to be delivered during the first part of April. Sources suggested that shipping and contracts will be fixed this week. A number of shipping inquiries have been announced for Group I and Group II cargoes out of Yanbu, Saudi Arabia, some perhaps combining the two. These cargoes would move to India and the U.A.E. There is also word of a requirement for Group I to be supplied to receivers in Sudan, possibly from Jeddah, Saudi Arabia.

This report bids a welcome return to at least one Iranian Group I cargo being shipped from Bandar-e Emam Khomeyni to receivers in Sharjah. This parcel, assumed to be SN500, is the first identified shipment for some time from Iran and may signal the resumption of Iranian exports to the West Coast of India and the U.A.E. Prices have not been confirmed, but U.A.E. sources suggested that the landed price for this parcel was around $800/t, CIF.

Prices for Group III exported from Al Ruwais, U.A.E., are unchanged for Far East destinations but lower for material being exported to Indian receivers, perhaps because of competition from Group II being offered out of Yanbu. Receivers producing transformer oils and associated products can use either grade.

Factoring in this dynamic, prices for Al Ruwais oils are assessed slightly lower at $745/t-$760/t for 4 and 6 cSt. Group III sold by Bapco from Sitra, Bahrain, which does not carry full approvals, is assessed at $765/t-$790/t, not dragged down by sales into India. Neste is believed to net back $810/t-$825/t on an FOB basis for oils from the same refinery because it holds more approvals.

Offers for Group II from Far East sources have been accepted, and a cargo of some 15,000 tons is preparing to load for delivery to India and the U.A.E. Prices were not disclosed but are reckoned to be around $765/t for 150N and $855/t-$870/t for 500N, basis CIF Middle East Gulf.

Local Group II sales from the U.A.E. on an FCA or truck-delivered basis are unchanged at $895/t-$920/t for 100N, 150N and 220N, with 500N and 600N at $1,000/t-$1,045/t.

Africa

North African trade is awaiting the result of the EGPC tender for bright stock supplied into Alexandria, Egypt. The contract should be issued this week, and it may go to the incumbent supplier due to the complexities of the deal. Receivers in Algeria are looking for more Group I from Italy, and although the amounts are small, they are all significant given that they and other North Africa demands were historically supplied from Mohammedia, when a refinery there produced Group I base oils.

A shipment of 12,000 tons of Group I has been loaded out of the U.S. Gulf Coast for shipment to Lagos, Nigeria, by the end of March. This is the first large shipment to Nigeria in some weeks, and it may be repeated during April or May. No other deals were announced this week, and with little availability from the European arena, there may be a lag before further supplies are sourced from that region.

Baltic traders noted that they are working two cargoes but do not yet have material nor potential loading dates. In addition, differing ideas about prices would need to be resolved as Nigerian purchasers are balking at offered values.

Prices for Group I oils now bound for Nigeria have been described by not confirmed at $895/t-$920/t for smaller quantities of SN150, $955/t-$995/t for SN500, SN600 and SN700 and $1,055/t-$1,085/t for bright stock, all basis CIF/CFR. These prices refer to quantities of Group I oils delivered into Apapa port in Lagos and are assessed based on deals, fixed and loaded or loading on a prompt basis.

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