Group III demand remains slack, with no signs of uptick in main markets such as Europe and the Middle East Gulf. Some players suggested a few weeks back that early summer would bring an upswing, but it has not materialized. It may still, but forecasts now suggest no manifest change in market patterns.

Group II remains relatively snug, with no sellers reporting surplus barrels to be moved prior to the quiet August month. Demand is constant, providing sales for all suppliers in this market.

Group I in Europe remains tight, as demand increases for heavier neutrals that have gone shorter following temporary and permanent closures of principal supply points. Imports continue to feature as a new aspect to the Group I market, with material arriving into Europe from a variety of sources, including unexpected ones such as Turkmenistan.

Hurricane season started early in North America when Hurricane Beryl hit the West Indies and now the United States Gulf Coast, and exports will now be curbed from U.S. Group I and II sources that regular loading for Europe and South and Central America.

Crude oil has basically remained static, not responding in any shape or form to elections in the United Kingdom and France. Prices remained in the same ballpark as last week as demand rallied on storm precautions implemented in the U.S., which could induce prices to rise.

Counterbalancing this situation, Russian crude abounds and shows no signs of ceasing to flood markets such as China and India. Demand in China is lackluster as the country struggles to return to pre-pandemic economic growth rates.

Prices for dated deliveries of Brent crude remained steady, coming in this week at $86.15 per barrel, for September front month settlement. West Texas Intermediate dipped around $2 to $82.65/bbl, for August front month, a surprising development given the weather situation in the southern U.S.

Low-sulfur gasoil prices fell back a bit to $788 per metric ton still for July front month. All of these prices were obtained from London ICE trading July 8.

Europe

Erroneous information floated in the market recently that several supposed Group I had loaded out of Northwestern Europe, bound for Apapa port in Nigeria. This information was incorrect, as no cargoes loaded for export. In fact, no producers could muster the quantities necessary to make an offer for export. Moreover, current finance problems in Nigeria are complex and make it impractical for traders to receive payments for imported cargoes.

Europe remains tight for supplies and availabilities of Group I base oils, and all suppliers are concentrating on markets within the region, which are still reportedly net short of material. Were it not for imported quantities of Group I grades all requirements would not be covered.

More Group I cargoes from a Red Sea source are being planned for the second half of this year, with one due to arrive during August. The U.S. has dried up for Group I availabilities, and the onset of hurricane season lessens the likelihood of cargoes coming available. 

Trading in European markets remains steady, and no immediate supply problems came to light the past few days. Buyers said they are getting adequate supplies of Group I grades and are looking to purchase larger quantities of heavy neutrals rather than the lighter grades. Some blending operations have may have moved switched to Group II grades to replace Group I light neutrals since Group I solvent neutral 100 and SN150 were very difficult to lay hands on last year.

Base oils are again available from ExxonMobil’s refinery in Port-Jerome, France, following repairs from a fire. Mol’s refinery in Szazhalombatta, Hungary, has gone into what could be the final European Group I turnaround for this year.

Prices continue to be steady, with levels firm but not increasing during July. The steadiness of crude and petroleum products prices have relieved upward pressure on base oils.

Spain still has some availability issues following the fire at Puertollano, but reports heard at the end of last week indicate that supplies have restarted from this refinery, although it could not be verified if full production had resumed. In Algeciras, Spain, Cepsa still only have SN150 and bright stock availabilities in July. Prices remain quoted at $1,150/t for SN150 and $1,390/t for bright stock.

Greek producers have been heard offering very high prices, but it would appear that these were posted to deter spot buyers and did not apply to regular contracted customers. The numbers were quoted to this report were $1,234/t for SN150 and $1,530/t for SN500 or SN600, on an FCA basis ex Aghio.

Discounting the Greek offered numbers, prices for Group I sales within Europe are between €1,013/t and €1,150/t for SN150, at €1,075/t-€1,215/t for SN500 and at €1,385/t-€1,445/t for bright stock.

The dollar exchange rate to the euro improved the past week to $1.08423. The average price differential across all grades between notional Group I exports from Europe and sales of that grade within the region is unchanged at €10/t-€25/t.

Group II prices in Europe remain in the same ranges as previously announced. Some higher priced imports had arrived from the U.S., but these moves merely brought those prices into line with levels established by the main suppliers in the region.

It has been confirmed from a number sources that some suppliers have wide ranges of prices depending on customer status in terms of payment record, quantities being bought and general status in the industry. Large blenders are able to negotiate lower prices than smaller operations that are still regular buyers.

Higher prices from one U.S. importer remain at €1,090/t for 110N, €1,120/t for 220N and at €1,220/t for 600N, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam.

Overall Group II prices are unchanged at €1,090/t-€1,135/t ($1,170/t-$1,215/t) for 110N and 150N, at €1,120/t-€1,155/t ($1,200/t-$1,235/t) for 220N and at €1,220/t-€1,265/t ($1,305/t-$1,355/t) for 600N. These prices apply to a wide range of Group II base oils from European, U.S., Red Sea and Asia-Pacific sources, all imported in bulk.

The Group III market does itself few favors by increasing availabilities of these base oils to the extent that the market becomes oversupplied and prices are exposed to downward pressure from buyers who can opt for alternative suppliers. For example, the large 10,000-ton tender awarded to a European trader, only involved in the Group III market on a spot basis, turns out for a supply of up to 14,000-15,000 tons to be shipped in two parcels from Sitra, Bahrain. The cargoes will go into Rotterdam, where previously the trader had taken a cargo from Malaysia.

It is still not clear what the status of the appointed distributor is at the moment, since Stasco also draws Group III supplies from Sitra for sale within Europe, and it is imagined that this supply will compete directly with Stasco’s.

Demand remains dull, with some blenders still hanging on to the notion that a rise in finished lube demand was coming. This report is still waiting to see if that pans out.

Prices in Europe for Group III grades with partial slates of finished lubricant approvals or no approvals are unchanged at €1,460/t-€1,495/t for 4 and 6 centiStoke grades and at €1,435/t-€1,455/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

A couple South Korean suppliers maintain lower offers of €1,260/t-€1,270/t for 4 cSt, on an FCA basis, but these prices are only offered to regular lifters. An interesting development will be that one of these suppliers may achieve full European approvals during next year, or in 2026, and the interest will be to see what they do with prices. 

Prices for rerefined Group III oils are also unchanged at €1,425/t-€1,455/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Prices for fully-approved Group III grades are unchangedat €1,785/t-€1,820/t for 4 and 6 cSt and at €1,825/t-€1,835/t for 8 cSt, all on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain.

Baltic & Black Seas

Despite prices being offered and news of these prices coming from Lagos, no Russian cargoes have been seen or reported for receivers in Nigeria, with finance problems being cited as the probable cause of delays.

However, there are also rumors of resistance for Russian material being used in Nigeria, with a number of blenders openly stating that they will not use Russian base oils due to specification and quality parameters. There are also mounting political pressures being exerted on buyers not to purchase Russian material. But with no other cargoes arriving into Nigeria, a Russian option may be the only one available in a market which must be rapidly running out of base oils.

Lukoil continues to load cargoes out of the Baltic bound for India and Singapore. Also 5,000 tons parcels are being routinely supplied into Gebze, Turkey. Although Singapore cargoes were always loaded out of the Baltic, more Baltic cargoes are being loaded than in the past, suggesting that damage to base oils production at Volgograd refinery in southern Russia was more substantial than was claimed locally. Ukraine sent missiles into the refinery, but the full extent of damage to the refinery was never revealed by Lukoil or the Kremlin. 

FOB prices for Russian SN150 and SN500 ex St. Petersburg or Vyborg, estimated on a netback basis from prices offered into Nigeria, could be at $710/t-$735/t and $740/t-$765/t, respectively. Blended SN900 would be priced at around $795/t, using SN1200 plus various quantities of either SN150 or SN500. This is the problem with quality since “Western style SN900” is always blended using bright stock, but the Russian version is cut using SN1200, which is lower in specification in every feature.

Lotos continues to have no availabilities of Group I base oils for FOB sales ex Gdansk. All availabilities from the refinery are being sold in East European markets, where Group I is currently short due to Mol’s maintenance turnaround. One European trader offered to pay domestic prices for an FOB purchase of 3,000-4,000 tons of two or three Group I grades, but the offer was turned down.

The Black Sea movement of around 2,000 tons, eventually transported in flexi-tanks, was bought by German traders from Turkmenbashi, Turkmenistan. The complex logistics are daring, with the material being first transported by road or rail to an eastern Black Sea port, then loaded into flexies in containers and finally shipped across the Black Sea to a European port, perhaps Constanza, Romania, or Bourgas, Bulgaria. The containers were then delivered to respective receivers.

It is believed that the trader involved in this business is looking to take further quantities from this source for future trade into Eastern Europe. There may also be possibilities to take material from Uzbekistan.

A number of blending operations in Turkey are trying to survive difficult commercial borrowing conditions, but some companies are shutting down and releasing staff. Cheap imports from the United Arab Emirates and Russia are undercutting local blenders, even when the latter use Russian base oils and additives. Some blenders are resorting to buying finished lubricants and acting as resellers in Turkey.

There is a dearth of European quality base oils in Turkey, with MOH sending out high numbers for SN150 and SN500 or SN600 – much higher than current European Group II levels. It was considered that these prices were designed to deter any interest in taking Greek barrels into the Turkish market. The delivery would have been unaffordable to all Turkish blenders.

The latest prices for Russian base oils, on a CFR basis ex Gebze, Turkey, are estimated at $825/t-$850/t for SN150 and $835/t-$865/t for SN500. European suppliers cannot and will not compete with such levels.

Prices from Tupras are unchanged at 34,326 lira per ton for spindle oil, Tl 29,745/t for SN150, Tl 31,829/t for SN500 and Tl 43,036/t for bright stock, all offered ex rack, plus a loading charge of Tl 5,150/t.

Prices for Group II grades being imported and resold are unchanged at €1,290/t-€1,345/t for 100N, 150N and 220N and at €1,475/t-€1,525/t for 600N, all on an FCA basis. These grades were previously sold in dollars, but dollars are unavailable.

Group II base oils were previously imported from the Red Sea, the U.S., or South Korea, but recently Russian Group II grades were being offered in Turkey having much lower selling prices than Western or Red Sea barrels.

Group III oils with partial or no approvals, including 4 cSt from Tatneft in Russia, are now priced around €1465/t. Smaller quantities of fully-approved Group III grades from Cartagena, Spain, are regularly delivered into Gemlik and resold on an FCA basis to local blenders requiring fully-approved grades for toll blending for majors. Prices for these oils are unchanged at €1,960/t-€1,995/t, basis FCA.

Middle East

Red Sea reports confirm that large base oil cargoes are being loaded and delivered to receivers on the West Coast of India, Pakistan and the U.A.E. Records show that in April and May more than 65,000 tons was shipped from Yanbu and Jeddah, Saudi Arabia, defying Houthi attacks on shipping passing through the Bab-al-Mandeb Strait.

There are suggestions that Indian and Pakistani vessels are not being targeted. Obviously, Luberef is doing something right to make this trade function without running into problems as had first been reported when the Houthi attacks were at their peak.

How this arrangement has been achieved is not disclosed, but sources in the U.A.E. suggest that only Western flagged vessels are subject to Houthi assaults.

Another S-Oil cargo of Group I grades for Northwestern Europe is currently awaiting a suitable vessel to make the Suez transit and then return. The cargo will load during the second half July, arriving into Rotterdam in late August or early September.

In the Middle East, Sepahan pushed export prices for SN500-plus. Cargoes are still coming out of Bander Khomeini and Bandar Bushehr, moving relatively small quantities into the U.A.E., but not now into Indian ports due to India now having a surplus of Group I. This trade could be useful for blenders in the U.A.E., who are facing shortages of Group I.

It is strange that Luberef continues to sell large quantities of Group I and II into the Indian market when there is now a surplus of Group I there.

Group I imports are arriving into Hamriyah and Ras al Khaimah, U.A.E., from Thailand and now India, Russia and Saudi Arabia, the latter country having exported record quantities of base oils during April and May.

Russian base oil cargoes continue to be discharged in Hamriyah, and this report has been able to obtain the latest price indications from U.A.E. sources. Prices on a CFR basis are around $835/t for SN150 and $845/t for SN500. Prices have moved upwards by $15/t from the last advised, due to higher freight rates. Parcels of between 5,000-12,000 tons have loaded from Limas, Turkey, and also from the northern Baltic, from St. Petersburg.

Netbacks for partly approved Group III exports from Al Ruwais, U.A.E., and Sitra are unchanged at $1,425/t-$1,475/t for 4, 6 and 8 cSt Group III grades. Netbacks for gas-to-liquids Group III+ ex Ras Laffan, Qatar, are unchanged at $1,500/t-$1,560/t. Economics and cost allocations of Shell cargoes are not disclosed.

Netback levels are assessed from distributors’ selling prices, less estimated marketing, margins, handling and freight costs.

Prices for Group II base oils being sold ex tank in the U.A.E. or on a truck delivered basis in U.A.E. and Oman are unchanged at $1,685/t-$1,725/t for 100N, 150N and 220N and at $1,775/t-$1,825/t for 600N.

The high ends of the ranges refer to RTW deliveries to buyers in remote locations in the U.A.E. and Oman.

Africa

Preparations appear to be underway to load a large base oil cargo from Rotterdam and Fawley. This parcel will contain all types of base oil from Group I through Group II and Group III, and also some easy chems which may be Group lV PAOs.

It has not been declared to the shipping agent in Durban if the vessel will sail on to Mombasa to deliver part cargo into facilities in that port, but the total quantity of the cargo could be up to 25,000 tons. it has not been revealed if a vessel has been fixed as yet, but ExxonMobil use the same owners for these cargoes so it will be a matter of routine when chartering is completed.

West Africa reports a cargo has loaded out of Fawley with around 10,000 tons of three Group I grades for receivers in Guinea, Cote d’Ivoire and Ghana. 5,000 tons of three grades will cover the contracted supply in Tema for the Ghana tender, and the balance of the cargo will be two parcels, discharging in Abidjan and Conakry.

Seemingly no progress has been made by government and local banks to sort out the problems accessing dollars. Traders are basically boycotting the Nigerian market, staying away from importing base oils into Apapa, with no assurances of payment terms or timing. One U.A.E. based trader has been scouring U.S. markets for a cargo of Group I base stocks but with little success at the target prices required to make a cargo work.

One inquiry was issued from receivers with a company based in the United Kingdom. The problem is that the inquiry was received by a trader some ten days ago, with a delivery laycan of July 3 or 4. The parcel was for a total of around 5,000 tons of SN150, SN500 and SN900. It has not been disclosed if any further progress was made on this requirement, it is thought probably not!

Nigeria is not in good shape at the moment, with the rainy season underway and the potential of having no base oils with which to blend lubricants for at least the next few months.

The cargo which was to load out of El Dekheila has not loaded. A quantity of 5,000-6,000 tons of bright stock was purchased from a U.S. East Coast refinery and subsequently shipped to Egypt. Bright stock will be blended with other base oils to produce SN900. Russian origin SN150 and SN500 would make up the balance of the cargo.

Prices CFR Apapa in respect of possible future trades, other than Russian barrels, are indicated at new higher levels, at around $1,125/t-$1,165/t for SN150, $1,195/t-$1,225/t for SN500 and SN900 at around $1,275/t-$1,300/t.

Russian offers continue to be much lower. Last levels heard remain indicated at $930/t for SN150, $970/t for SN500 and $1,020/t for SN900.

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

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

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