Weekly EMEA Base Oil Price Report

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The wars in the Middle East and Ukraine have caused significant disruptions to base oil and finished lubricant trading patterns across Europe, the Middle East and Africa, heavily impacting supply chains, transportation routes and costs in ways that continue to evolve.

With neither conflict appearing likely to end soon, such disruptions can be expected to continue. For example, quantities of base oils that were being delivered into Ukraine and Israel are now having to be brought to blending operations located in these countries by alternative means. Bulk supplies are being replaced by road deliveries, and flexi bags and iso containers are also being used to supply quantities of base oils previously delivered by sea-going ships.

Lubricant producers in the Israel and Ukraine continue to operate, but they face skyrocketing costs for insurance, wages and energy. Operations in both countries are still supplying lubes to that are vital to the day-to-day functioning of military and civilian end users.

Base oil and lube business activities in neighboring countries is only a bit less affected. Across the regions, the extent of adaptability is staggering with many players inventing ways to cope and get around supply difficulties.

Such inventiveness will continue to be needed as both conflicts rage on. Some observers expressed hopes that the Oct. 16 killing of Hamas leader Yahya Sinwar would open possibilities for a ceasefire agreement, but Israeli Prime Minister Benjamin Netanyahu has vowed to continue pressing attacks on Hamas in the Gaza Strip and Hezbollah in Lebanon. There were also fresh reports the past week of planning to retaliate against Iran for an Oct. 1 missile attack.

Regarding the war between Russia and Ukraine, there was news that Russia’s ambassador to the United Kingdom expressed desires to negotiate a peace. But Ukrainian President Volodymyr Zelenskyy has vowed to never negotiate as long as Russian President Vladimir Putin remains in power. Moreover, there is no sign of Russia being ready to concede Ukrainian demands for negotiations, including departure from all territories that Ukraine held before Russia’s 2014 invasion.

Crude oil prices continued a rollercoaster ride that reverses course almost every week. Values weakened the past few days following the announcement that Saudi Arabia will not increase production cuts for the remainder of this year.

With the Chinese market still in the doldrums, large scale crude demand is just not around, hence the Saudi decision to sell whatever is available to maintain revenue streams required for infrastructure developments planned over the next few years in the Kingdom.

Dated deliveries of Brent crude retreated by some $4 to $73.60 per barrel, still for December front month settlement. West Texas Intermediate crude traded down in a similar manner to $70.15/bbl, for November front month.

Low-sulfur gasoil prices are also showing weaker, having moved to $685 per metric ton, for November front month. All of these prices were obtained from London ICE trading late Oct. 21.

Europe

Following an export cargo of API Group I oils that loaded from Greece a few weeks ago, there have been no other true exports from European Group I sources. The small parcel of bright stock from Spain was reported sold via a trader into the Turkish market at an incredibly low price.

The trader involved with this parcel and the Greek cargo is also supplying other products and may be able to cross allocate costs involved in base oil shipments. This might allow the trader to place the base oil cargoes at prices competitive with base oils from Russia, for example. The FOB price at the refinery for the Spanish cargo was reportedly $1,150/t – more than $200 less than going rates in Europe.

ExxonMobil regularly ships large cargoes of various base oils to locations in Africa and sometimes Singapore. A maintenance shutdown at a company refinery in Singapore is now completed, which may preclude further near-term shipments of Group II by the company from Europe to Singapore.

Lubricant blenders in Europe say Group I availabilities within the region remain positive and that they feel little pressure to build base oil inventories.

Prices are under pressure from slower demand as the market adjusts to the winter season, when activity slows and production of finished lubricants gears down until spring. In Eastern Europe, which is supplied by refineries in Gdansk, Poland, and Szazhalombatta, Hungary, prices have dipped to around $1,120/t for solvent neutral 150 and $1,185/t for SN500.

Mediterranean prices are moving lower at around $995/t-$1,010/t for SN150, $1,060/t-$1,085/t for SN500 or SN600 and in an exceptionally wide range of $1,150/t-$1,295/t for bright stock.

The planned maintenance turnaround at the Repsol installation in Cartagena, Spain, has affected production of Group II and Group III feedstocks, but Group I output reportedly will not be affected.

Overall prices for Group I sales within Europe are lower at €975/t-€1,025/t for SN150, €995/t-€1,170/t for SN500 and €1,290/t-€1,355/t for bright stock.

The euro’s exchange rate versus the United States dollar fell a bit to $1.08291 on Monday. The average price differential across all grades between Group I exports from Europe and sales within the region remains €45/t-€75/t, but note that export prices are being manipulated across product groups, so discounted numbers should not be taken as absolute.

Group II prices are holding up despite the drop in Group I values, which could be expected to exert some pull on Group II numbers. Apart from a small number of offers that include discounts, the second segment is steady. More downward pressure may be coming, though, as some forecasts call for lower demand during November and December. Current values represent excellent premiums over diesel.

It is possible that pressure is greatest on 600 neutral grade, as buyers are asking for lower prices due to the variations between the European market and other regions such as the U.S. and Asia-Pacific. Lighter grades are firmer, likely because demand is holding up better.

European Group II prices are unchanged at €1,150/t-€1,175/t for 110N and 150N, €1,185/t-€1,215/t for 220N and €1,265/t-€1,305/t for 600N. These prices apply to a wide range of Group II oils from Europe, the U.S., the Red Sea and Asia-Pacific, all imported in bulk.

European Group III markets are brimming full of material after arrival of cargoes from the Middle East Gulf, Malaysia and South Korea. Increased transportation costs led to hikes of around €60/t-€100/t, eliminating exceptionally low prices.

Prices from most suppliers are now grouped relatively closely with the exception of one trader offering substantial discounts to the general market. It will be interesting to see if this trader maintains that position since they would also face high costs from the Middle East Gulf for insurance and freight.

While costs are up, Group III markets in Europe are also now experiencing an oversupply situation that may cause downward pricing pressure. Distributors are contending that they already are just covering costs.

Recent studies assert that Group III demand in Europe will increase 7%-11% in the next three years – encouraging news for existing suppliers. At the same time, it appears that two more suppliers are in line to obtain a full slate of OEM automotive lubricant approvals during 2025 and 2026.

One trader is currently offering 4 centiStoke Group III in Europe for €1,135/t, and a South Korean supplier has prices quoted at €1,230/t-€1,240/t for 4 cSt and marginally higher rates for 6 cSt, on an FCA basis ex Antwerp-Rotterdam-Amsterdam. It is believed that this distributor has organized another shipment from Ulsan, to arrive before the end of the year.

European prices for Group III oils with partial slates of finished lube approvals or no approvals are at €1,135/t-€1,355/t for 4 and 6 cSt and at €1,235/t-€1,275/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Prices for rerefined Group III are unchanged at €1,175/t-€1,195/t, basis FCA ex rerefinery in Germany.

Values for Group III oils with full slates of approvals are at €1,775/t-€1,810/t for 4 and 6 cSt and at €1,820/t-€1,835/t for 8 cSt, on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain. The supplier of these oils may have issues with availability due to a temporary maintenance shutdown, although inventories were built up ahead of the event.

Baltic & Black Seas

There are inquiries on the shipping markets to locate vessels to load out of the Baltic for receivers in Nigeria. As far as this report can tell, no ships have been put forward to load cargoes, which would be around 12,000 tons, including around 7,000-8,000 tons of SN900 and smaller amounts of SN150 and SN500.

A 12,000-ton Singapore cargo was loaded during September and has transited the Suez Canal and the Red Sea and is now on the Indian Ocean. Another cargo will load this month from St. Petersburg to take 5,000-7,000 tons of SN150 and SN500 to Gebze, Turkey.

Prices for Russian base oils offered on an FOB basis ex St Petersburg or Vyborg, Russia, are assessed based on prices offered into Nigeria, minus typical freight and predicted margins, and also based on landed prices into Turkey.

Those prices are estimated at $775/t-$795/t for SN150, $810/t-$825/t for SN500 and blended SN900 at around $875/t. The latter would be blended using SN1200 and either SN150, SN500, or a combination of both, depending on availability of each grade. Prices are based on typical freight costs of around $185/t-$200/t for a 7,000-12,000 ton cargo.

Russian imports from the Baltic and Black seas continue to dominate the Turkish market, with prices estimated to be around $845/t-$860/t for SN150 and $855/t-$875/t for SN500, basis CFR Gebze. Volga river vessels also deliver quantities of up to 3,000 tons per parcel by sailing around the Black Sea coastline.

Tupras’ prices for the Turkish market remain as follows: 36,872 lira/t for spindle oil; Tl 32,085/t for SN150; Tl 34,539/t for SN500; and Tl 46,626/t for bright stock. Prices are in lira and are offered ex rack, plus a loading charge of Tl 5,150/t.

The Tupras tender cargo won by a trader has been allocated to Nigeria. The cargo may now be loaded, although no vessel appears in shipping lists seen by this report.

Group II grades, imported into Turkey, are being resold on an FCA basis, and prices are unchanged at €1,425/t-€1,465/t for 100N, 150N and 220N and at €1,595/t-€1,625/t for 600N. Group II base oils are imported from the Red Sea, the U.S. and South Korea. Russian Group II grades are also offered ex tank in Turkey with prices reported to be around €70/t-€120 lower than others.

Imports from Russia of Group III oils with partial slates of approvals were last heard priced around €1,245/t for 4 cSt, on an FCA basis. Material originally shipped from Middle East Gulf sources is no longer available, but some distributors have sent quantities of Group III base oils to Turkish receivers from main cargoes that discharged in Antwerp-Rotterdam-Amsterdam.

Smaller quantities of fully-approved Group III grades from Cartagena, Spain, continue to be delivered into Gemlik, Turkey. Prices are unchanged at €1,960/t-€1,995/t, basis FCA.

Middle East

There have been reports a substantial increase in the numbers of cargoes of base oils loading out of Yanbu and Jeddah, most of which have been primed for the west coast of India or United Arab Emirates. But there have other destinations such as Singapore, Durban and Dar-es-Salaam. Also noted are ports such as Aqaba and two Sudanese ports.

European cargoes are being explored again, with S-Oil taking the reins on these parcels since they have the infrastructure and organisation in Rotterdam to store and resell quantities of Group I base oils.

Parcels have been up to 24,000 tons on one cargo, which would have been a combined Group I and Group II parcel which discharged first in Mumbai and then in Jebel Ali in U.A.E.

The war in the Middle East looks like it could expand further after Sinwar’s death. The Hamas leader was considered a hardliner and by some as an obstacle in ceasefire negotiations. But reports leaked this week that Israel is planning an attack on Iran to retaliate for Tehran’s Oct. missile attack on Tel Aviv.

If the violence does expand, so too could disruptions to countries such as the United Arab Emirates, Qatar, Bahrain and Kuwait. Base oil trade would be adversely affected if shipping companies and protection and indemnity clubs designated the Middle East Gulf as a war zone, with all that that implies for insurance costs for vessels entering the Gulf.

The arbitrage between the U.S. and the Middle East Gulf may be slower to open than previously expected. Hurricane season in the U.S. is ending without damage or disruptions to base oil supplies, despite high tolls on parts of the country’s Southeast. Inventories built up ahead of the season may now be released for export markets such as the U.A.E. and the West Coast of India.

Prices for imported Group I base oils arriving into Middle East Gulf ports, predominantly into the U.A.E., are pitched at around $1,065/t-$1,095/t for SN150, $1,120/t-$1,155/t for SN500 and $1,200/t-$1,235/t for bright stock, all on a CIF/CFR basis ex U.A.E. ports.

Russian base oils continue to arrive into Hamriyah port in the U.A.E., with reports of a vessel carrying around 15,000 tons of Russian grades. This quantity will be re-loaded on another vessel which is currently at anchorage at Al Jubail, Saudi Arabia and which is either picking up bunkers or loading a part cargo of clean petroleum products.

The Russian cargo will be loaded on board the vessel on its return from Al Jubail, and will then sail to Nigeria to discharge in Lagos’ port of Apapa. It is not known whether the parcel was discharged to shore storage, or whether the material is still on board the Russian charter, which if the latter, the cargo will be transferred on a ship-to-ship basis. 

Prices in Hamriyah for base oils in this shipment are assessed differently and are put at around $785/t for SN150 and $795/t for SN500. It is assumed that there will be a large quantity of SN900 included in the cargo, which could be priced at around $845/t. 

Assuming a freight cost of around $150/t from Hamriyah to Apapa, and a margin for the trader involved, prices delivered into Nigeria could be around $995/t for SN150, $1,025/t for SN500 and $1,080/t for SN900, numbers which are line with Russian indications for Nigerian prices.

Group III base oil netbacks for material being exported from Al Ruwais, U.A.E., and from Sitra, Bahrain, are still assessed at $1,145/t-$1,220/t fort 4, 6 and 8 cSt.

Netbacks for gas-to-liquids Group III+ base oils ex Ras Laffan in Qatar are also unchanged at $1,295/t-$1,325/t. Cargo economics and cost allocation for marketer Shell are not disclosed, hence netbacks are on an indication only basis.

All netback levels are assessed from distributor selling prices minus estimated marketing, margins, handling and freight costs.

Group II imports to the U.A.E. are resold ex tank or often on a truck-delivered basis around the U.A.E. and Oman. Prices for these are unchanged this week at $1,685/t-$1,725/t for 100N, 150N and 220N and at $1,775/t-$1,825/t for 600N. These grades will be sold in local U.A.E. dirhams, since the U.A.E. currency is pegged to the U.S. dollar. The highs of the ranges refer to RTW deliveries to buyers in locations in the U.A.E. and northern Oman.

Africa

Agency sources in Durban, South Africa, confirmed that an unknown vessel has sailed from the U.S. Gulf Coast and will discharge her cargo in Durban during November. The vessel was delayed due to the last hurricane passing through Florida. The vessel carries around 8,000 tons of Group II grades.

No further news is reported regarding the large cargo of mixed base oils loading from Europe before the end of this year. The cargo will possibly load towards the end of this month or early in November. Another cargo of around 9,000-10,000 tons has loaded from Fawley, U.K., for discharging in Guinea, Cote d’Ivoire and Ghana. The cargo split will be 5,000 tons of three grades into Tema, Ghana, and the remainder for the two other ports.

The Nigerian base oil market remains wrought by currency problems, with the exchange this week at 1,695 naira to one U.S. dollar. The Greek cargo mentioned previously has discharged in Apapa, but the whole cargo quantity was sold as SN400 , with no SN900 on board. The grades that were loaded would have been SN150 and SN600, so presumably these were blended produce a SN400 grade. The cargo quantity is not known but perhaps was not too large.

There are questions as to how this cargo quantity managed to compete with the Russian prices for material sitting in tank, but there are convoluted reports about how this cargo was accounted for and how payments were to be made.

As reported last week, local banks have been accepting the 125% naira deposits required for the issuance of letters of credit, but the same banks have not been bidding for CBN dollars, instead using customers deposits to support their own businesses.

Russian supplies continue to impinge on the base oil market in Nigeria, their pricing becoming the norm and traders of European and U.S. oils expected to compete with these lower price values. One trader has been unable to lift a cargo from the U.S. that would have been uncompetitive against Russian barrels. Hence this trader is moving a 15,000 tons cargo from Hamriyah to Apapa. The vessel should load in the next three weeks and arrive toward the end of the year since the vessel will also discharge around 14,000 tons of clean petroleum products in another port before reaching Apapa. The material is of Russian origin, but the economics remain shrouded in mystery, with exceptionally low delivered prices into U.A.E.

Some buyers want to have access to better quality material, so there is still an opening for cargoes from the U.S. and Europe, but buyers will not pay the price for that quality.

Prices in Apapa for potential future trades of oils from Western sources are now assumed to be more competitive to Russian numbers than previously outlined, assessed at $1,095/t-$1,125/t for SN150, $1,175/t-$1,220/t for SN500 and $1,255/t-$1,275/t for SN900. Prices for Russian barrels imported from Russia and the U.A.E. are indicated at $995/t for SN150, $1,025/t for SN500, and $1,080/t for SN900, basis CFR ex Apapa.

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