EMEA Base Oil Price Report


It may have taken a bit longer to reach Europe, the Middle East and Africa, but a wave of price hikes is now rolling through these regions.

The main culprit was unquestionably crude oil prices, which now sit in the mid-50s dollars per barrel range, compared to the mid-40s six weeks ago. Thats a significant increase, but OPEC members and other crude producing countries would like to drive prices significantly higher. Prices have leveled off over the past couple weeks, perhaps because the market is waiting to see if producers will adhere to production cutbacks that were the basis of November agreement that started the run-up.

Dated deliveries of Brent crude settled yesterday at $55.75/bbl in front March settlement, up about $2/bbl from a few days earlier. With West Texas Intermediate crude at $52.65/bbl for February front month, the crack is maintained at around $3/bbl. ICE LS Gas Oil, as an oil product marker, is showing at around $490 per metric ton.

In the base oil industry, there is considerable conjecture about the appropriate level for base oil prices, given current crude and feedstock values. An argument could reasonably be made that the simple answer is to add 20 percent – based on the amount that crude has risen – to -rices that were in effect in early November. The base oil scene is more complex, though, with variances on availability and demand from one API group to the next and from viscosity grade to viscosity grade.


European API Group I FOB levels moved upwards, with light solvent neutrals reaching $545/t-$565/t. With availabilities of these grades still tight, upward pricing pressure may remain. Prices for SN500 and SN600 increased by bigger increments – around $10/t-$20/t above levels reported last week – and are now assessed at $610/t-$625/t. Bright stock is back in demand for many export destinations, but European supplies are not competitive against sources from the United States or the Far East. Bright stock offers this week included prices of $825/t-$875/t, an increase of $35/t-$45/t from last week.

The prices above refer to large parcels of Group I base oils supplied or offered FOB ex-mainland European supply points.

Prices for sales within Europe are climbing for January and February sales and deliveries, with increases announced almost daily. Group I grades have risen around 10/t-20/t this week, and some sellers are reverting to weekly prices for specific volume offtake. Buyers are keen to stock up but are being restricted to quantities available at specific prices. Sellers are offering prices that are valid for only seven to 10 days and requiring contracts or advance payment. The differential between domestic and export prices has been difficult to gauge this week due to the chaotic nature of markups occurring but is assessed between 45/t-85/t.

Group II importers continue to apply hikes that – according to them – are based on markups in source markets, but the increases in Europe are also remarkably in line with hikes for Group I oils. It appears that nominal increases of $10/t-$20/t have been applied to light-viscosity grades, but 500 neutral and 600N are facing increases as high as $40/t-$50/t.

Prices are being updated continually, but fully approved light grades are assessed at $585/t-$620/t and 500N/600N at $740/t-$795/t, CIF main European ports. Ex-tank prices still incur a premium of around $45/t-$60/t (40/t-55/t).

Group III prices within Europe do not appear to have risen yet, perhaps because competition is rife, but sellers and some buyers agree that upward pressure exists. Some buyers expressed willingness to pay more for guaranteed deliveries of stocks that have a full slate of original equipment manufacturer finished lubricant approvals.

At least one long-term European supplier advising that it might withdraw from certain sectors of the market if prices fail to reflect raw material costs. Market sources contend that these are not idle threats.

For now, prices for partially approved 4 centiStoke and 6 cSt oils remain $550/t-$670/t, FCA northwestern Europe. Group IIIs with full approvals supplied FCA Antwerp-Rotterdam-Amsterdam sit at 705/t-735/t for the same grades, while 8 cSt oils remain around 670/t, CIF. Large cargoes of may carry discounts of $25/t-$50/t from the equivalent dollar prices for FCA sales.

Baltic and Black Seas

Baltic suppliers and third party traders appear to be concentrating on smaller parcels of 3,000 to 5,000 tons going into Northwestern Europe and the United Kingdom, volume that seems to fill gaps left by reduction of Group I output from major local producers. Some 20,000 tons of Russian oils have been placed into Northwestern Europe, most at prices that have not been increased.

Many suppliers are also reporting the loading of flexitanks bound for West Africa, but few bulk cargoes have emerged from the Baltic, perhaps because of finance problems in Nigeria. After the Orthodox Christmas celebrations, export traffic from Russia seems normal, with trains of base oils traveling to Baltic ports.

FOB prices have risen due either to ex-gate increases or efforts to match mainland European prices. Russian SN150 is now $520/t-$545/t where available in bulk volumes, and SN500 is $575/t-$590/t. Actual prices for large volumes of SN900 could not be found, but are here estimated at $645/t-$675/t, FOB.

Black Sea trade is thin this week, with one large cargo reported moving from Northwestern Europe into Gebze, Turkey. It consists of six grades and, considering it comes from a source producing Group I and Group III oils, may contain both those API groups. Black Sea shipping reports indicate a large quantity of Russian oil being delivered in Kavkaz, Russia, presumably for trade to the United Arab Emirates or the West Coast of India.

Prices for Group I imports are not quoted this week, due to lack of offers from Mediterranean suppliers and the sharp increases to Mediterranean FOB and CIF prices, which may require some time for acceptance by Turkish importers.

Middle East Gulf

Sources confirmed that a 6,000-ton Group I cargo is due ship from the Red Sea to Sudan before the end of January. No further news has been heard regarding an enquiry for Aqaba, Jordan.

Iranian exports figure highly in Middle East Gulf trade, with a number of large parcels being planned for movement during the second half of January, mostly aimed at Indias West Coast. Cargoes are being loaded out of Bandar-e Emam Khomeyni and Bandar Bushehr, where shore tanks are being replenished by refineries to the north. Sepahan Oil is trying to sell its high viscosity index Group I SN500 directly to end users (who may also act as distributors to other users.

FOB prices for Iranian exports has risen faster than European oils and now sits at $630/t-$645/t, Prices for Iranian material imported to the U.A.E. for re-export is being offered at $655 FCA, or $685 FOB.

U.S. exports appear to have been sold into India instead of the Middle East Gulf. U.A.E. buyers said prices for this business were too high for transactions involving long delivery times, especially given availability of oils from Iran and Saudi Arabia. Prime Group I material will delivered to contract buyers in U.A.E. at $610/t-$635/t for SN150, $665/t-$680/t for SN500 and $895/t-$925/t for bright stock, all basis CIF/CFR.

Exports from Al Ruwais, U.A.E., are being sold directly to India users who may or may not act as distributors. Some 30,000 tons of Group III from Al Ruwais is scheduled to load during January for destinations in the U.S., Europe and India. Pricing information from sellers is not available, but calculations based on delivered prices suggests FOB values of $485/t-$520/t.

Group II sellers from the Far East and the U.S. have raised prices in new offers to Middle East Gulf receivers. Sources say new transformer oil producers in the U.A.E. are looking to take lighter grades while lubricant blenders want heavier material – and cargoes of both can be arranged.

Prices have risen $30/t-$50/t on a delivered basis, to $575/t-$595/t for light-vis grades and $735/t-$755/t for 500N/600n, CIF Middle East Gulf. Smaller parcels carry premiums of $25/t-$60/t.


South African receivers and agents have commented that large cargoes with multiples base oil grades are moving into Durban from Northwestern Europe and sometimes the Mediterranean. These are mostly Group I but some Group II and Group III oils are also showing up, possibly from Singapore or the U.S.

Group I oils are said to be selling in South Africa at $820/t-$880 for the full range of solvent neutrals, and $1095/t for bright stock. These prices refer to volumes loaded onto trucks.

Until now, trade across the Mediterranean into North African consisted of relatively small deliveries of 3,000 to 4,000 tons of Group I sold to former customers of refinery in Mohammedia, Morocco. Oils from Italy and Spain still covers these users, but a large cargo of some 10,000 tons has been delivered into Libya from Greek sources. This appears to be a new trading opportunity, but the reasons behind it are not yet apparent.

Some 15,000 tons of base oils, presumed to be Group I, have loaded out of European ports for discharge into Dakar, Senegal; Conakry, Guinea; Abidjan, Ivory Coast; and Tema, Ghana. The volume suggests these supplies are centered around a tender that regularly brings 5,000 tons to Tema.

In contrast, Nigeria has been exceptionally quiet. Multiple reports indicate that receivers have become so frustrated with foreign exchange problems and the banking system that they are prepared to halt base oil imports for now while calling on the government to solve the banking issues. Presumably base oils represent only a small portion of products affected by the problems.

Offers still being made to Nigerian buyers, but few, if any, are responding, perhaps because they include the price increases that have fallen into place over the past couple weeks.

With many cargoes having discharged in early January, and still discharging now, traders in Nigeria say that they have sufficient stocks in tank to supply their markets for a couple of months. Some say they intend to complete cargoes during visits to Europe next month for industry conferences in London.

Current offers contain delivered numbers of $665/t-$725/t for Group I solvent neutrals and $970/t-$995/t for bright stock. These levels refer to deals for Baltic supplies plus a second port load in Northwestern Europe or Iberian Mediterranean locations. Baltic supplies of Russian SN900 are presently considered at $795/t, CFR/CIF Apapa port, Lagos, Nigeria.

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

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