EMEA Base Oil Price Report


Inquiries and negotiations for base oil purchases have slowed noticeably this month, as they often do, but numerous cargoes are still due to be shipped between now and early January, suggesting the market may be more active than normal this holiday season.

OPEC and other oil-producing nations agreed recently to extend crude production cuts through the end of 2018, but crude prices have not responded as they might have hoped. Dated deliveries of Brent crude have flattened, posting at $63.75 per barrel in London yesterday for February front month trading, while West Texas Intermediate was $57.50/bbl on the same terms. Players in many oil markets seem to welcome the prospect of a period of stability.

ICE LS Gas Oil is showing at $572 per metric ton for January front month, marginally higher than last week, perhaps because of low temperatures in Europe and gas supply issues.


Although distillate prices have moved ahead in recent weeks by some $50/t, there has been no clear effect on base oil prices within Europe. Group I export prices remain stable to firm, this meaning suppliers have not been discounting to clear stocks this year. Prices for light solvent neutrals remain between $695/t and $730/t, with a few buyers complaining that substantial quantities are scarce. SN500 and SN600 are more readily available and are stable at $775/t-$795/t.

Bright stock appears to be in high demand, with a number of traders looking to lift large parcels of this grade for deep-sea destinations where the arbitrage for European supply has opened up. Prices being offered for such parcels put this grade at $855/t-$875/t.

The prices above refer to large cargo-sized parcels of Group I base oils offered on an FOB basis from mainland European supply points.

There have been some spurious bids made by less than reliable buyers who appear bent on bringing prices down to their required levels. These are wholly inappropriate and are ignored by serious sellers looking to move cargoes prior to the years end. Suitable shipping is now a paramount issue as Dec 31 nears.

Sources report that many lubricant blenders are planning to shorten working hours or perform maintenance during the next two weeks as commercial operations wind down. Some will operate with skeleton staffs, allowing most workers to take time off.

Base oil storage tanks in mainland Europe appear to have plenty of material, with a number of Baltic suppliers replenishing storage in Antwerp-Rotterdam-Amsterdam and the east coast of the United Kingdom either before or just after New Year. These deliveries will ensure that supplies remain stable during January. Prices for trades within Europe are therefore unchanged, and the differential between FCA prices and spot export value remains at 50/t-70/t.

Prices for Group II oils, which are growing in popularity, are stable at $675/t-$695/t for light neutrals and $835/t-$855/t for 500N and 600N, for large cargoes landed on a CIF basis into Antwerp-Rotterdam-Amsterdam. FCA prices for parcels transported within Europe are 785/t-815/t for light-viscosity oils and 850/t-885/t for heavier grades.

There are few reports of new Group III activity other than continuing imports from the Middle East Gulf. Bulk deliveries into Northwestern Europe are priced at $785/t-$825/t on a CIF basis for 4 centiStoke and 6 cSt grades. Local sales are valued at 695/t-720/t, basis FCA Northwestern Europe. Group III oils with full slates of finished lubricant are priced at 790/t-825/t for 4 and 6 cSt grades and 765/t-785/t for 8 cSt, basis FCA Antwerp-Rotterdam-Amsterdam.

These latter prices refer to ex-rack sales or quantities delivered by truck.

Baltic and Black Seas

Sources involved with Baltic Sea trade report that traders and distributors are clearing inventories from FOB storage facilities. The aforementioned shipments to Northwestern Europe and the U.K. include uncommonly large parcels – one of 9,000 tons going into Rotterdam and two of almost 10,000 tons into the U.K.s east coast. The common December sell-off cargoes to West Africa and points beyond has not occurred this year, but the European shipments may help suppliers achieve the same tax position without the headaches of delivering into markets such as Nigeria.

Some Nigerian inquiries are still being discussed this week, but time is running out for them to be completed and lifted before years end, and this could explain the shipments to Europe. Many sellers are saying they will not be able to cover large parcels until January or even into February. The arbitrage into the Middle East Gulf and the West Coast of India, which appears to have opened up for European-sourced base oils, may also apply to the Baltic as a 9,000-ton parcel may be bound for the United Arab Emirates or Mumbai anchorage.

FOB prices, which are often calculated on the basis of netbacks, are still assessed at $675/t-$690/t for SN150 and $735/t-$750/t for SN500. SN900 appears to be available for $775/t-$795/t, while bright stock is at $880/t-$920/t.

Turkish buyers appear to be taking advantage of last-minute sales to move material into ports such as Derince, both from Mediterranean refiners and from Tupras refinery in Aliaga, Turkey. More than 10,000 tons of Group I are due into Derince during the last days of December. Additional quantities may be loaded out of Kavkaz, Russia, for Gebze, Turkey, suggesting that a replacement vessel as been chartered to aid STS loading from this location.

The contracted supplies discharging into Derince from Greek Mediterranean sources are estimated to be prices at $785/t-$795/t for light neutrals and $810/t-$825/t for SN600, basis CIF.

Middle East Gulf

Red Sea shipping circles reported that a large Saudi Arabian milk-run will be loading out of Yanbual Bahr and Jeddah during early January. This cargo will discharge at all the usual ports in Oman, plus three more in the U.A.E. No further news has been gleaned regarding the start-up of supplies of Group II grades from Yanbu after word came two weeks ago of another delay to the upgrade of Luberefs plant there. An inquiry was issued for Group I material into Aqaba, Jordan, but no news about it is forthcoming yet.

Iranian exports have slowed, although a number of smaller cargoes are primed for late December and early January, destined for India and Pakistan. There is word of a maintenance shutdown at one of the main Iranian refineries producing Group I grades for export, but it is not clear whether this is a planned event or the result of operational problems.

SN500 and premium SN500 are the main export grades, and premium SN500 from Sepahan Oil is priced at $785/t-$795/t, basis FOB. Some claim that Iranian SN500 values have risen 40 percent during 2017, but this seems inaccurate since it implies prices began the year at $570/t. In fact, high quality SN500 was available in January for $655/t-$680/t on an FOB basis from Bandar-e Emam Khomeyni and Bandar Bushehr.

New offers for large quantities of Group I material have been received in U.A.E. from suppliers and traders using sources in the U.S. Gulf Coast. Sellers have given options for discharge into either the U.A.E. or India and in one case even into West Africa.

Group III have reached new highs, with a cargo of around 22,000 tons reportedly being booked from Al Ruwais, U.A.E., to Mumbai earlier this month. One of the sellers at Sitra, Bahrain, exported a smaller parcel into the U.A.E. and another into Mumbai.

Netback prices have been re-assessed but are remain around the same levels reported previously: $735/t-$765/t for 4 and 6 cSt grades from Al Ruwais, basis FOB; and $65/t-$90/t higher for the same grades of material offered by Neste from Sitra. These values were calculated CIF prices for material delivered to buyers and a distributor on Indias West Coast.

A flurry of Group II offers reached Middle East Gulf buyers from sources in the Far East, perhaps because supplies arent yet flowing from Yanbu. This vacuum will have to be filled, and there may be few options other than Far East exports. Prices are heard to be higher than previously offered – around $732/t for 150N and $893/t for 600N, CIF Middle East Gulf. These prices are for cargo-sized parcels, while local availabilities of Group II in the U.A.E. have climbed to $840/t-$875/t for 100N, 150N and 220N, and $955/t-$985/t for 500N and 600N, on a CFA or delivered basis. Prices are variable and depend on distance, quantity and method of shipment.


While Nigeria is receiving fewer cargoes from Baltic suppliers this year, there are announcements of large parcels to be loaded from the Mediterranean and the U.S. Gulf Coast. The first of these have already been booked to load ex Italian and Spanish Mediterranean ports, totaling around 12,000 tons of Group I grades of relatively high specification. At the same time, traders are assembling option cargoes for Nigeria and as fallback positions offering them into the Middle East Gulf and India. Knowing some of the Nigerian parties to whom these parcels have been offered, the fallback positions seem more likely. Altogether these parcels amount to 35,000 to 40,000 tons of Group I.

Nigerian prices are based on the two-port Mediterranean loading, which would deliver into Nigeria at $825/t-$845/t for SN150, $865/t-$890/t for SN500, $965/t for low viscosity index bright stock and $998/t for bright stock with VI of at least 90. For the record, Baltic SN900 is now assessed at $944/t. Other oils from the Baltic or the U.S. Gulf Coast may be priced higher than those levels listed above, depending on freight and FOB levels at time of loading.

The prices above refer to cargoes of at least 5,000 tons of API Group I oils delivered on a CIF/CFR basis to Apapa port in Lagos.

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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