Meanwhile, Trump is seen as an even stronger supporter of Israel than current President Joe Biden, expected to make fewer demands on Tel Aviv.

Weakness in crude oil markets is hurting Russia, along with Saudi Arabia and other oil producing nations. It also appears to be eroding base oil prices, which enjoyed buoyant positions during the first nine months of this year. Numbers across all base oil groups are looking fragile, and a number of European suppliers are granting heavy discounts.

Refiners are seeing margins for base oil versus diesel fall back to levels seen near the end of 2023. The API Group I segment has been most affected, as evidenced by rumors of very low prices being offered to buyers who can swiftly confirm purchases of larger quantities. Some of these sales are being made under an export banner and include discounts of more than $200 per metric ton.

For example, there are unconfirmed reports of solvent neutral 150 being offered at around $750/t, on an FOB basis ex Mediterranean or Northern European sources. These are extremely low levels compared to market norms of around $950/t.

Group II is also moving lower as demand tails off in the main economies of Germany, the Benelux countries, France and the Mediterranean. Weaker numbers are also creeping into the Group III market, particularly in Europe, matching other regions beset by oversupply. Global supply of this grade has outpaced demand growth.

Crude and feedstock prices are lower from the start of this week, with dated deliveries of Brent crude dipping by a couple of dollars to $71.95 per barrel, for January front month settlement. West Texas Intermediate crude fell below the $70 mark to $68.15/bbl, $2 lower than last week, still for December front month.

Low-sulfur gasoil prices slid $20 to $658/t, still for November front month. All of these prices were obtained from London ICE trading late Nov. 11.

Europe

There are reports of various export quantities of mainly light neutrals, some reputedly offered at extremely low levels. There are signs that inventories may be swelling, requiring producers to free up tank space for new production – and that this is leading to large discounts  that leave base oil prices only marginally above feedstock values.

One seller in the southern Baltic Sea has supposedly offered a quantity of SN150, along with other grades such as SN500 and bright stock, at a price reported as $755/t, basis FOB. This cargo quantity has been bought by a trader and will possibly be transported to the United Kingdom’s west coast.

There are also rumors of a sale in the Mediterranean to another trader of around 2,000 tons of SN150. There is reason for skepticism, though, because the supposed source for that trade began a temporary maintenance shutdown Nov. 10. Unless for logistical reasons, there is no logical explanation then for selling for $750/t, FOB. If the rumor is true, the shipment is said to be headed to Turkey.

If discounts were to continue, that would suggest that Group I exports from Europe could resume, but apparently the low prices only apply to light solvent neutrals and not to SN500 or bright stock. Bright stock availability remains relatively tight as only a handful of suppliers have this grade available in quantity.

Prices for Group I sales within Europe are moving lower as demand remains elusive across Europe. Demand should dip even further the next few weeks and not pick up again until well into the first quarter of next year.

Apart from the extraordinary low numbers mentioned above, Eastern European prices for availabilities from Poland and Hungary have fallen to $955/t for SN150 and $1,025/t for SN500, on an FCA basis. Mediterranean prices are lower at $945/t-$965/t for SN150, with SN500 and SN600 offered at $1,015/t-$1,030/t and bright stock at $1,200/t-$1,245/t.

Overall prices for Group I sales in Europe have fallen to €925/t-€955/t for SN150, €970/t-€1,010/t for SN500 and €1,190/t-€1,255/t for bright stock, depending on quantity and availability.

The dollar exchange rate with the euro declined to $1.06410 Monday. The average price differential across all grades between Group I exports from Europe and intra-regional sales of the grade is unchanged at €20/t-€45.

European Group II prices are coming under downward pressure, and the main suppliers have imposed markdowns and continue to review values as demand starts its annual year-end decline. Prices are now at €1,100/t-€1,125/t for 110 neutral and 150N, €1,135/t-€1,165/t for 220N and €1,185/t-€1,225/t for 600N. These levels apply to a wide range of Group II oils from Europe plus U.S., Red Sea and Asia-Pacific imports shipped in bulk.

The European Group III market is now definitively oversupplied, with large quantities of all grades in storage. Attempts to pass on increased shipping costs have not really succeeded, and persisting distributors have made some regular customers unhappy and lead to requests for cuts.

A single seller cutting prices can force the whole market to follow suit. Some buyers take material from multiple suppliers and therefore are able to monitor market moves. One supplier continues offering values well below the rest of the market, even after imposing increases of €15-20 to €1,155/t for 4 centiStoke grades.

Overall, European prices for Group III oils with partial slates of finished lubricant approvals or without approvals are at €1,155/t-€1,265/t for 4 and 6 cSt and at €1,235/t-€1,320/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Prices for rerefined Group III grades are unchanged at €1,135/t-€1,175/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Prices for fully-approved Group III oils 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.

Baltic & Black Seas

A cargo of Russian SN150 and SN500 has loaded from the Baltic bound for Turkey. Reliable shipping information is nigh impossible to obtain, but local sources in the Baltic have confirmed that a vessel loaded out of St. Petersburg and has now sailed.

FOB prices for exports from St. Petersburg or Vyborg, Russia, are assessed from prices offered into Nigeria, after taking account of typical freight and predicted margins, and also from reported landed prices into Turkey and Singapore.

FOB numbers are reckoned lower than previously assessed – around around $765/t-$785/t for SN150, $795/t-$820/t for SN500 and around $865/t for SN900 made by blending a heavy neutral grade such as SN1200 or Russian bright stock.

Getting information in advance on vessels loading and leaving the Baltic is almost impossible, so this report is now relying on hearsay and secondhand information from multiple sources, some less than reliable.

Another Tupras tender cargo out of Turkey is being talked about, but it is unclear whether base oil production will be affected by last week’s fire at the company’s refinery in Izmir. The fire involved compressor going up in flames, with a number of employees injured, although none seriously. The trader who bought the last Tupras cargo is said to be interested in taking another, presumably for the same receivers in Nigeria.

A well known lubricant producer in Turkey has offered Group I and II base oils for export, the latter being described as being produced in Spain. The Group I quantities were confirmed to be of Russian. A trader received quotes of very competitive prices for the Group I grades, except for SN900, which is priced at $1,100/t, ex works in Gebze, Turkey. This blended grade may contain bright stock, which would explain the relatively high price. SN150 is priced at $810/t and SN500 at $825/t.

Russian imports from Baltic and Black Sea ports continue to flood the Turkish market and are estimated to be priced around $765/t-$780/t for SN150 and $775/t-$790/t for SN500, basis CFR Gebze. These levels have been extrapolated from the ex works offers received from Turkish sellers, who have imported and stored oils produced by Russian refiners such as Lukoil, Rosneft and Gazprom.

Availability of Tupras base oils for the domestic market is uncertain, but prices are at 35,462 lira per ton for spindle oil; Tl 31,593/t for SN150; Tl 33,721/t for SN500; and Tl 45,038/t for bright stock. Prices are in lira and are offered ex rack, plus a loading charge of Tl 5,150/t.

Local prices for Group II grades are realigned in accordance with offers received from a Turkish trader. Values are now at $890/t-$1,100/t for 110N,  220N and 350N and at $1,300/t-$1,325/t for SN500. Higher spec 150N is also available for $1,150/t-$1,175/t. These grades may be of Russian origin or may come from South Korea.

The market for Group III oils with partial slates of approvals includes 4 cSt from Tatneft in Russia, last heard priced around €1,220/t, basis FCA. Quantities of fully-approved Group III grades from Cartagena, Spain, continue to be delivered into Gemlik. Prices for these are unchanged at €1,960/t-€1,995/t on an FCA basis.

Middle East

There are reports of more cargoes of base oils loading out of Yanbu and Jeddah, Saudi Arabia, most of which have been allocated to the West Coast of India or Mumbai anchorage or to United Arab Emirates ports, although there are cargoes to Aqaba, Jordan, Sudan and South Africa.

With the Group I supply scene changing in Europe, there may be limited opportunity for Group I cargoes from Yanbu, but the door may still be open for S-Oil to take Group II parcels to compete with the likes of Chevron, ExxonMobil and Phillips 66. Luberef previously imported Group II into the Mediterranean.

Iran has not announced any retaliatory action for Israel’s strike on military targets two weeks ago. Anticipation that the U.S. could step in to directly defend Israel against Iranian attacks may have discouraged the Tehran from taking action, or retaliation could still be coming.

U.A.E. sources with close ties to Iranian base oil producers, have said Iran will use their proxy in Lebanon, Hezbollah, to hit Israel and that Tehran will not be involved directly, since that action could risk U.S. involvement.

News circulated that Qatar has pulled out of ceasefire negotiations between Israel and Hamas and the expulsion of all Hamas representatives from Qatar. Hamas is no longer welcome in Qatar, and pundits speculated that Trump’s election victory may have been behind the action.

U.A.E. base oil trade Iran may be on the wane as sources said some ties between Iranian base oil producers and U.A.E. importers are being reconsidered – that some buyers may opt not to take deliveries from companies such as Sepahan and Iranol. But some sources say this attitude will be short lived, and with imports arriving from Russia on a regular basis, it is hard to see where principles actually lie with traders and blenders in the U.A.E.

Prices for imported Group I base oils arriving into Middle East Gulf ports, predominantly into U.A.E., are unchanged at $990/t-$1,020/t for SN150, $1,035/t-$1,065/t for SN500 and $1,125/t-$1,180/t for bright stock, all on a CIF or CFR basis ex U.A.E. ports. These prices refer to imports from Thailand, India and Singapore and do not apply to Russian imports.

A cargo of around 15,000 tons of Russian base oil arrived into Hamriyah port in the U.A.E. and was reloaded on a ship-to-ship basis while at anchorage onto a vessel bound for Nigeria. The vessel was reported at anchorage off Durban, South Africa, on Nov. 8 and may be taking on supplies or making a crew change.

Prices for that cargo are estimated at $785/t for SN150 and $795/t for SN500, on an STS basis ex Hamriyah anchorage. SN900, which will be included in the cargo, could be priced at around $845/t. With freight cost of around $200/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.

Netbacks for Group III grades being exported to Europe from Al Ruwais, U.A.E., and Sitra, Bahrain, are unchanged at $1,145/t-$1,220/t for 4, 6 and 8 cSt. Netbacks for Shell gas-to-liquids Group III+ base oils ex Ras Laffan, Qatar, remain unchanged at $1,295/t-$1,325/t. Shell cargo economics and cost allocation are not disclosed, hence netbacks are indications only. Netback levels are assessed from distributor selling prices minus estimated marketing, margins, handling and freight costs.

Prices are lower this week for Group II base oils imported and resold ex tank in the U.A.E., or on a truck-delivered basis around the U.A.E. and Oman – at $1,625/t-$1,680/t for 100N, 150N and 220N and at $1,720/t-$1,785/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

News reports on the next large cargo of mixed base oils loading from Rotterdam and Fawley, U.K., are that the vessel is giving a loading laycan of Nov. 15-22. Once loaded, further information will be received from agents in Durban about cargo details and arrival dates.

West African news is that the cargo of 9,000-10,000 tons Group I base oils loaded from Fawley is due to discharge in the first port, Tema, Ghana, in the next week or so. The vessel will then move to Abidjan, Cote d’Ivoire, and finally Conakry, Guinea, to finish discharging.

In Nigeria, exchange rate and currency problems still hamper trade. The naira’s exchange rate with the dollar rose to 1693 Monday.

Russian base oils that have been in tank for some months now continue to affect the Nigerian market as buyers come to expect European and U.S. suppliers to compete with Russian levels. 

The trader moving a 15,000-ton cargo on the FPMC 35, which loaded ship-to-ship at Hamriyah anchorage, is now at anchorage off Durban. This report contacted sources in a shipping agents in Durban to ascertain the reasons for the stopover and an estimated date of arrival in Apapa port, Lagos.

Prices for potential future trades are going to have to be more competitive against Russian prices. With an edge on quality and specifications, traders may not have to match Russian levels, but will have to justify higher rates, particularly if bright stock has been used to blend the SN900.

Levels could be around $1,095/t-$1,125/t for SN150, $1,125/t-$1,160/t for SN500 and $1,185/t-$1,200/t for SN900. Russian- and U.A.E.-delivered prices for Russian barrels are indicated at $995/t for SN150, $1,035/t for SN500 and $1,085/t for bright stock, on a CFR basis ex Apapa.

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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