Europe-MidEast-Africa Base Oil Price Report


The point at which many thought the EMEA base oil market would change has arrived, but fundamentally no dramatic changes have been reported. Most players are back from vacation this week, and have found that the base oil market has remained flat with very few exceptions.

Buyers are still wary that the market is long, or at least demand is poor, with many European blenders claiming sufficient inventory to delay purchases for another couple of months. Some report they would like to buy additional stocks, but limited tank space, high ullages and cash flow are not allowing this to happen.

Crude movements this week support prices starting to rise, with Dated Brent peaking at $116 per barrels early Tuesday. ICE gas oil front month has screened as high as $1004 per metric ton, some $20/t more than last week. Producers state that should crude and feedstock prices continue rise or even stabilise at current rates, then base oil prices are going to increase.

There have been some positive moves from suppliers in the Baltic and Black seas regions, and although Russian base oils dominate these areas, the sentiment these moves create is important for the rest of the European mainstream market.

API Group l prices have risen by $10 to $20/t from last week, and with the remainder of this week to come with almost everyone back at their desks, next weeks report may show a definitive movement in the base oil markets.

Light neutrals are priced at $1050 to $1075/t, with heavier material being offered at $1055 to $1085/t. With bright stock going short with limited prompt availability, prices have swiftly increased to $1100 to $1130/t where available. These prices pertain to bulk cargo parcels, offered or sold FOB ex mainstream sources in mainland Europe and North Africa.

Local prices remain in line with last weeks numbers. Slack demand is playing a large part in local European prices, whilst at the same time many blenders who buy these stocks are finding it hard to move quantities of finished lubricants to end users. The forecasted post holiday rush to replenish base oil stocks has yet to happen, and it may be some time before blenders buy substantial quantities of lubes.

Local European levels are assessed at 70 to 100/t higher than the prices pertaining to bulk cargoes being exported, taking account of extra handling, storage, and transportation costs.

Baltic and Black Seas
Baltic supplies of Russian and Belarus material have been sporadic to say the least. Many resellers and distributors claim to have little or no avails until mid-September at the earliest. Some buyers are looking to Eastern Europe for lesser quality base oils, and even the U.S. exports to West Africa are being affected. Some Nigerian buyers are looking to buy prompt oil whilst the market is considered to be at a low, but are being frustrated by the lack of material.

Prices for available material have lifted again this week, with sellers asking for $1030 to $1045/t basis FOB Baltic ports, with offers for the end September at $1070 to $1085/t. These prices are for SN 150 and SN 500. Heavier grades such as SN 900 are in short supply, mirroring mainland Europes bright stock situation. Prices for this grade have also risen, but with no large export sales or offers on the table, levels are only $1100/t for second half September loading.

Black Sea business has been brisk, with buyers enquiring about various packages of Group l grades. With Russian and Uzbek material in relatively short supply, sellers have been attempting to raise prices to reflect higher FCA prices ex Russian and Uzbek refineries. These levels have been confirmed this week at $1040 to $1065/t for SN 150 and SN 500, on a CIF delivered basis to ports in the Istanbul to Gemlik range.

Traders are turning away enquiries and bids for bright stock at $1080/t, and offers for small quantities of bright stock are being pushed at $1120 to $1130 CIF. Supply limitations imply that other grades will have to be delivered in tandem to allow freight economics to work.

Middle East
The Middle East Gulf is relatively quiet with many receivers just reforming after Ramadan and the Eid holiday. UAE buyers are lamenting the lack of Iranian material on offer through BIK, although one buyer commented they were able to buy quantities of Iranian base oils by using local currency or pre-payment. It was acknowledged that with current events piling more and more pressure on trade against Iran, the outlook for this region is looking extremely negative.

Local UAE receivers report Iranian material at $1075/t basis for SN 500 FOB in dollar equivalent. SN 150 is selling at $5/t. SN 650 is available at $1055/t, but not many local receivers are taking this grade. No confirmation was available for any cargoes going to the West Coast of India.

With European arb closed to Middle East Gulf receivers, and with Russian material in the Black Sea becoming more expensive, the only alternative source of material for this region is the Far East, where offers for Group ll grades have been emanating. Despite some small supply pockets from Pakistan and even reverse trade with India, it is difficult to see where the Middle East Gulf will obtain Group l material without prices rising substantially to re-open European and Black Sea routes.

In East Africa, existing sellers have taken the Sudanese supply. Receivers in Mombasa are seeking mixed grades of Group l in flexies, but it is difficult to see its source, other than UAE. Prices are reported as higher into this region, perhaps reflecting rising FOB numbers at source. SN 150 and SN 500 are being offered at $1320/t, with bright stock at $1425/t, all basis CIF Mombasa or Dar-es-Salaam in flexie containers.

A main refiners turnaround will impact South Africa next month despite a seasonal market that should be lively with agricultural and mining industries embracing the springtime increase in demand for finished lubricants. Group l prices remain unchanged at $1265/t for neutrals with bright stock at $1440/t.

West African receivers are looking to October and November cargoes for the next round of purchases, but with some of the usual alternative supply options currently closed, buyers may gravitate back to European mainstream producers. This could break the deadlock on European demand, causing inventories to fall, and combined with all other raw material cost pressures, may cause prices to rise.

Current prices for Group l products arriving into West Africa are $1045 to $1070/t for the solvent neutral range, with bright stock at $1160 to $1225/t, all basis CFR Ghana or Nigeria ports. These prices refer to cargoes which were loaded four or five weeks previously, and may have been negotiated up to a month prior to loading. Such is the time lag on supplying base oils into West A frica.

Future prices will be based on new European mainstream levels, with added freight and trader margins, product will be landing in six to eight weeks at $100/t higher than present numbers.

Group II/III
Group ll European sales continue to expand. Prices are increasing to $1100 to $1125/t for the light vis products, with heavier grades such as 500N being sold between $1145 and $1170/t.

Group ll business in the Middle East Gulf has been muted, with many receivers electing not to take contract barrels during September. This may be explained from two angles: with inventories remaining high after Ramadan and Eid or with suppliers trying to increase prices to reflect higher production costs which are being countered by receivers.

Prices remain as previously reported at $1055 to $1100/t for the light vis 150N grade, with 500N being offered at $1120 to $1135/.

Group lll prices within mainland Europe may have fallen over the past week. Because of rebated supplies and temporary discounts reported by some buyers, Group lll prices throughout Europe have remained the same, with some buyers accepting slightly higher prices for higher vis grades. Availability is not a problem, with the same lackluster demand affecting these grades as well as Group l.

Prices remain as reported last week at 1150 to 1165/t for 4cSt grades with 6cSt material at 1195 to 1210/t ex tank basis.

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

Related Topics

Base Oil Reports    Base Stocks    Market Topics    Other