Europe-MidEast-Africa Base Oil Price Report


Sellers have retreated ahead of the holiday period, declaring that they cannot sell base oils at the low levels requested by many buyers.

Normally within a market as diverse as the EMEA regions, some sellers would be breaking ranks to take advantage of year end trading, or to increase market share in a competitive location, but it appears that all selling parties from the Middle East Gulf to Russia, to mainland Europe and South Africa are resolute as to required levels for sales of base oils.

Demand for base oils also appears to have waned drastically over the last few weeks; few receivers are looking to negotiate large parcels until the New Year.

The basic fundamentals have not altered dramatically during the last week. Dated Brent crude oil levels are $109 to $111 per barrel, and further evidence of equilibrium is obtained with ICE gas oil front month trends which have remained almost static over the last couple of weeks, trading between $950 and $964 per metric ton in early week trading. The vacuum gas oil crack shows demand for this material is healthy and growing, piling cost pressure on base oil manufacturers

Prices are becoming difficult to define accurately. For example, poorer quality API Group I material from Northwest Europe can be $60/t less than other mainstream offers.

Group I solvent neutrals are ranging between $1035 and $1075/t for lighter grades, with SN 500 now moving back within a band of $1075 to $1100/t. Some sellers have offered prices higher than these, but the feeling is that they were testing the market rather than actively trying to sell material. Bright stock in Europe has remained in the range of $1260 to $1325/t.

Local deliveries have regained some of the premiums lost over the last few weeks, with some buyers paying a little more than previously to buy small tranches of base oils to bolster inventories over the holiday period. Prices for prompt deliveries for December have increased by around $10 to $20/t for most Group I availabilities.

Russian Group I sales from the Baltic have been the source of many rumours. Some players are adamant that deals have been struck at levels approaching $950/t basis FOB for SN 150 and SN 500. None of these transactions has been confirmed, and most see FOB levels for the two main grades closer to $1000/t, if not above. With most large cargo movements now on the water, prices for small intra-regional parcels range from $1000 to $1030/t basis FCA.

Black Sea business appears to be stable. Few enquiries are coming from the large Turkish importers, so business which has been completed may be the last for the year. Sellers are trying to move numbers back to $1110 to $1150/t with offers for parcels of 3,000 to 4,000 tons of SN 150 and SN 500, but buyers are resisting these levels.

Prices for imported Group II material are mixed, with imports into the Middle East Gulf at the lower end of the scale whilst European imports have steadied around $1190 to $1265/t for grades such as 150N. Heavier grades such as 500 N are offered ex tank at $1320 to $1355/t. Concern has been voiced in Europe regarding the exchange rate differential for Group II sold in euros. One major importer stated a preference for dollar sales of these grades, but status quo is a powerful element, and this move may prove impractical.

Similarly Group III grades experience the same concern of dollar costs versus euro sales which can have enormous effects on the selling levels and realisations for these base oils. So far sellers have confirmed without exception that they propose to continue to sell in euros in the European markets.

The delta between Group I and Group III prices climbed to around $750/t on average recently, whereas the established norm was around $500/t. Sellers of Group III are unconcerned at such a differential and have commented this week that they feel that this gap can be maintained even with new imports hitting the European market. Prices are still 1360 to 1385/t for 4 cSt material, and 1380 to 1420/t for 6 cSt, sold ex tank from satellite storage in Northwest Europe and the Mediterranean. It is anticipated that further storage bases will be established for the imports from Qatar and Bahrain.

Middle East Gulf areas have been quiet although a couple of Iranian cargoes have been heard bound for storage in UAE or directly to India. Prices for the cargoes are $1085/t basis FOB for SN 500, with SN 150 some $10/t lower, and poorer quality SN 650 around $1025/t. These levels are similar to those seen over the past few months.

No changes to Saudi Arabian base oil prices have been heard this week. Effects of the Syrian trade embargo are yet to be fully experienced, but spectators reflect that during Q1 next year these effects will start to impact the whole region and not just Syria.

West Africa has witnessed an enormous quantity of base oils arriving over the past month with some 60,000 to 70,000 tons in total being imported, most into Nigeria. Product has arrived from a variety of sources, including United States, Northwest Europe and the Baltic, in various sizes and qualities ranging from rather dark, low VI material from Northwest Europe, to excellent quality bright stock from the Mediterranean.

Prices are varied, depending on source and quality. Levels have been heard as low as $1065/t for some Group l solvent neutrals, while higher spec materials have been landed around $1175/t, basis CFR. Bright stock, again depending on source and quality, was in a range from $1185 to $1465/t.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in East Grinstead, U.K. Contact him directly at

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