The Baltic relies on supplies of Group I base oils from Russia and Belarus, and most of the Russian refineries are in the northwest part of the country. However, it is also worth noting that material has been known to come from locations such as Angarsk and Omsk, which lie far to the east.

Black Sea supplies tend to be more locally sourced, with large volumes of Russian material coming from refineries in places such as Volgograd and Orsk. One rather interesting anomaly is that base oils produced in Fergana, Uzbekistan, also find their way to Black Sea markets. Unlike Fergana, base oils from Baku, Azerbaijan, and Turkmenbashi, Turkmenistan, are blended locally or exported to neighboring markets such as Iran.

One of the regions main suppliers just recently rejoined the market. Ukrtatnaftas plant in Kremenchuk, Ukraine, experienced production problems in the past few years and has only recently started to produce base oils once again.

Sourcing different plants in various countries effects the quality of base oils moving across the Black Sea. With varying quality comes varying prices and options for end uses. Lower quality material is discounted against prime Russian grades, but with a variety of end uses for each type of base oil, all qualities can be accommodated in the market.

The grades most in demand in the region are solvent neutral 150 and SN 500. Some refineries can make other industrial grades available on request such as I-8 (equivalent to SN 70), I-12 (around an SN 100) and heavier material such as I-40 and I-50.

Logistics are similar to those of Baltic supplies with one exception: The Volga river system can be used in some instances to bring material from refinery to FOB status in shore tanks around the Black Sea. This is in addition to railcar deliveries that are also used where discharge facilities include a railhead.

Storage points range from large terminals in ports such as Batumi, Georgia, and Feodosiya, Ukraine, to smaller facilities in locations such as Reni, Ukraine. The main supply points are based around the northeast part of the Black Sea, with Ukrainian ports such as Azov, Yuzhny and Nikolaev being used to load base oil cargoes.

Many smaller ports tend to have shipping restrictions such as shallow drafts that affect loading from these installations, and this can limit parcels to around 3,000 to 5,000 tons each. Some jetties are even more restricted with drafts of only 5 meters or less. Larger cargoes can be loaded from ports such as Feodosiya, which allows larger tonnage exports.

The downside is that few large vessels or parcel ships ply the Black Sea trade compared to other parts of the world. Hence, most cargoes tend to be on a stand-alone basis – a limiting factor for the movement of base oils out of the region.

Turkey is by far the largest off taker for Black Sea base oil sales, with ports such as Aliaga, Gebze and Izmit all having storage farms that can accommodate base stock imports. Over the past few years, the country gained a reputation as a bte noire, with some unscrupulous importers using light viscosity base oils as a diesel fuel diluent. This was extremely profitable for those involved because the duty on base oils was far lower than that of diesel. Lately the government had some success curbing this practice.

Significant and steady volumes of Black Sea cargoes also go to neighboring states such as Ukraine, Bulgaria and Romania. Some material also finds its way into Syria and Lebanon, although direct importation by sea has ceased due to the civil war affecting this region. Occasional receivers are in Cyprus, Greece and Israel, where smaller vessels can make the voyage without resorting to transshipment to ocean going ships.

The economics of the Black Sea marketplace are similar to those of the Baltic. Prices tend to be in the same ballpark because freight rates from FCA to FOB are largely identical and storage facilities charge more or less the same rates. However, European base oil prices do not react to Black Sea prices as they appear to do with Baltic sales. This may be due to the lower volumes being sold and the fact that the market is highly localized.