EMEA Base Oil Price Report


The outlook for an OPEC agreement to constrain crude oil output suddenly improved this week, pushing up prices for petroleum products and derivatives and raising prospects of upward pressure on base oil prices.

With supply limitations on API Group I light neutrals throughout Europe, and now suggestions that heavier grades may also come under pressure, base oil prices may be starting to firm independently of crude and feedstock costs.

Some export buyers are reporting limited availabilities of Group I neutrals, but they also advise that bright stock is freely available in large volumes and at weaker prices. To call the market confusing would be an understatement, and due to a wide variety of factors coming into play at the same time, the scene is muddied to say the least.

Crude oil prices firmed during the week, due largely to chances that OPEC members will agree to limit production, although this is not yet a certainty as Iran is cranking up production. Dated deliveries of Brent crude posted around $49.05 per barrel in late Tuesday trading in London, and West Texas Intermediate crude maintained a narrow crack of around $1, at $47.95/bbl. ICE LS Gas Oil, representing oil products, rose some $35 per metric ton during the week to $447/t for front month settlement.

Availabilities of API Group I stocks appear to have tightened, and solvent neutral 150 remains particularly scarce, with few large parcels available for export. Prices for light grades are up, with SN100 and SN150 between $485/t and $520/t depending on quantity available and specification. SN500 and SN600 also moved upwards, though by smaller magnitude, to $565/t-$585/t.

It is also worth noting that there has been marked interest in rerefined base stocks, with a number of receivers in West Africa electing to take smaller volumes of those oils in flexitanks from European sources. Traders have shown interest in obtaining Group I light neutrals from U.S. sources due to scant availability for this grade throughout Europe.

Bright stock is defying trends for other grades, showing ample availability from producers. Sources said current prices are too high given U.S. avails that have been placed into West Africa. Limitations on Nigerian trade have acted as a barrier to European material flowing into that market. Prices are left unaltered at $805/t-$840/t.

The prices above refer to large cargoes supplied or offered on an FOB basis ex-mainland European supply points.

Prices for local sales within mainland Europe and the United Kingdom remain unchanged, but pressure from rising crude and feedstock costs is tangible, and potential adjustments loom Dec. 1. Buyers looking for December bargains may be disappointed this year, as few sellers are admitting long positions for in-tank material.

The Group II market is vibrant according to a number of suppliers to this sector. Many have described a surge in activity, perhaps stemming from automobile emissions regulations that will encourage replacing Group I stocks with Group II. Following last weeks suggestion that prices for the heavier neutrals might dip, no reports of downward movement have yet been observed.

CIF prices are maintained at last weeks levels, with light grades at $555/t-$585/t, and 500N and 600N grades at $725/t-$785/t. Markups for Group I stocks will pressure ex-tank prices for Group IIs, but for now they remain approximately $25/t higher, (20).

From a European point of view, it appears that the Group III war has started. No reported cargoes have arrived from the Middle East Gulf during the last few days, which suggests that prices on an CIF basis – and therefore also on an ex tank basis – remain unaltered. New production, which is still seeking approvals that will allow it to be sold at a slight premium, continues to gain market share. Prices for 4 centiStoke and 6 cSt grades are $680/t or 615/t FCA.

Fully approved 4 centiStoke and 6 cSt grades FCA Antwerp-Rotterdam-Amsterdam are 705/t-735/t and 8 cSt material is priced at 670/t. CIF levels for Group III cargoes are perhaps $25/t-$50/t lower.

Baltic and Black Sea

Baltic reports are dominated by the surprising lack of Group I SN150 from Russia, as product is perhaps being sold domestically. Prices have risen sharply, but with few sales, it is difficult to pinpoint exactly where levels lie. Still no large West Africa enquiries have been fixed clean, although there are potential parcels being negotiated. Due to lower FOB prices being available ex U.S., closing deals for Nigeria has become extremely difficult, with margins being squeezed as payment is often not programed for a set date and sometimes not guaranteed.

FOB prices for Russian export grades are altered, with SN150 around $10/t higher than mainstream prices due to lack of avails, at $495/t-$520/t. Supplies of this grade in flexies are still more attractive ex Baltic where loading costs are lower than mainland locations. SN500 has moved upwards by $5/t to $500/t-$525/t, with sporadic supplies of SN900 offered in bulk at $585/t FOB.

Black Sea prices do not appear to have picked up from the very low numbers for Russian export grades, although some Turkish receivers complained of tight avails when seeking arrival in Gebze within the first half of December. The same receivers have turned to looking at Mediterranean-sourced material, but with light solvent neutrals hard to find in quantity, many buyers are opting to take Group II material. Buyers of light grades are also moving across to the heavier vis material.

Many claim that prices for the heavier Group II material are not competitive in the Turkish market and that concessions are being sought. Tatneft Group III exports continue into Turkey and Ukraine, although its been difficult to ascertain prices in this rather isolated market. Levels are expected to be competitive against alternative sources. Group I grades are maintained at $510/t-$535/t for SN150 and SN500/600 at $575/t-$590/t. Bright stock is indicated at $835/t-$855/t CIF. Russian SN500 for cross-Black Sea trade is still $475/t-$490/t CIF Gebze, Turkey.

The Red Seas regular trade continues from Saudi Arabia, although this week there are again rumors of a tender for Group I base stocks being issued from receivers in Sudan. It may be difficult to find storage for such a large base oil parcel, as its larger than normal at around 8,000 tons in total.

Middle East Gulf

The Middle East Gulf region reports a great deal of activity in the area, with base oils coming from the U.S. and Black Sea. Meanwhile, the region is now a net exporter of all grades, including large quantities of Group I and Group III to Pakistan and India, as well as Group III further afield to the U.S., Europe and Far East.

Iranian exports are planned for late November and early December. Sellers have tried to recover prices, with offers now $5/t-$10/t higher than seen earlier in November. FOB levels for the higher spec SN500 are around $595/t basis FOB Bandar Bushehr and Bandar-e Emam Khomeyni (BIK). FOB prices for SN150 and SN650 grades are around $565/t and $525/t, respectfully. SN500 ex United Arab Emirates has moved back above $600/t and can be seen in offers at around $610 FCA, or $620 FOB.

Incoming Group I material into the Middle East Gulf remains priced as per last reported and is delivered at around $555/t in respect of SN150, $625/t for SN500, and $855/t for bright stock.

Group III exports continue ex Abu Dhabi and Bahrain with sellers trying valiantly to protect both price levels and market share. FOB prices are unchanged this week, although some in various markets in which this production is being sold suggest that prices may be cut again before yearend. FOB levels in respect of 4 centiStoke and 6 cSt grades are assessed at $585/t.

Group II business is surprisingly buoyant this week, as sellers of premium imports described a great deal of interest throughout the region. End uses are not confined to automotive lubes, and rerefined Group II oils are being used to make transformer oils and other specialties. Prices for lighter grades have become comparable with Group I material.

Prices remain unaltered, with cargo-sized parcels assessed at $510/t-$535/t for light-viscosity grades and 500N and 600N at $665/t-$685/t, CIF Middle East Gulf ports.

Cross-Mediterranean trade from Europe into North African locations includes a number of cargoes fixed and also a number of enquiries for Group I base oils moving to ports in Egypt, Algeria, Tunisia and Morocco. Offer prices for the solvent neutrals moved higher this week to $565/t for SN150 and $610/t for SN500, basis CIF. Bright stock is estimated landed in North Africa around $845/t.


Nigerian receivers appear to have been enticed to consider supplies out of the U.S., where Group I prices have recently been lower than those posted in Europe. As a result, a number of parcels are in the planning stages from sources on the U.S. Gulfand east coast. Baltic suppliers are trying to compete so as to maintain a handle on West African business, but they are hampered by tight supplies of SN150 and SN500. Sources in Italy and Spain are continuing to compete, benefitting from shorter lead times and lower freights.

Pricing is still hypothetical but is higher for non-secured cargoes. Offer levels are assessed CIF/CFR at $655/t for small quantities of SN150 in bulk, up around $30/t from offers heard over a week ago, with no offers for virgin SN150 in flexies at this time. SN500 is offered at $685/t-$720/t, while bright stock is at $935/t-$955/t. Russian export SN900 in flexies has been offered at $755/t for smaller volumes.

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

Related Topics

Base Oil Reports    Base Stocks    Market Topics    Other