Don't Miss
an Issue.

Subscribe to Lube Report,. This FREE weekly e-newsletter features breaking news and base oil price reports.

August 16, 2017

Volume 17 Issue 52

    View Printer Friendly Article Bookmark and Share

EMEA Base Oil Price Report

Base oil trading in Europe, the Middle East and Africa normally slows this time of year, as many people take off multiple weeks for vacation. The past week, however, saw an unusually large number of deals being worked out, primarily for large parcels of API Group I oils moving from Europe into West Africa.

In addition, oddball cargoes are reportedly being booked from the Baltic Sea to the United States, Mediterranean ports and the Caribbean and from the Black Sea into Northwestern Europe. All in all, then, the summer of 2017 does not appear to be following the usual slowdown in trade.

Sellers and buyers suggested the past week that market players are dealing preemptively to hedge against the future direction of pricing, which seems difficult to predict at the moment. This has resulted in many export cargoes being assembled on prompt spot basis for deep-sea locations, which in turn has considerably shortened Group I markets and made availability of solvent neutral 150 extremely tight across all the European markets.

Crude oil prices fell back this week after an estimation that OPEC members and other oil-producing nations are not achieving targeted cutbacks in crude production. Many believe a global glut will develop and petroleum prices fall if participants fail to adhere to limits to which they have committed.

Dated deliveries of Brent crude dropped around $1.50 per barrel from last week to post yesterday at $50.85 per barrel in London for October front month settlement. West Texas Intermediate crude fell a similar amount to $47.60/bbl for September front month settlement. LS Gas Oil sold at $472 per metric ton on the London ICE market, $10 lower than last week.


Some observers had predicted that European Group I prices would not move during summer, but prices for exports showed distinct gains from last week. Light solvent neutrals rose most – to between $680/t and $695/t – perhaps due to limited availabilities of large quantities. Heavier neutrals such as SN500 and SN600 are at $745/t-$765/t, while bright stock appears stable at $810/t-$860/t. The large spread for bright stock stems from a collection of offers containing very high numbers.

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

In contrast, local markets are extremely subdued, limited to routine contract liftings or deliveries that have been planned for some time. Local spot traffic is almost non-existent as many blenders throughout Europe are still operating on reduced hours during August or closed for maintenance. This lull has inhibited significant changes in prices for FCA, ex-tank, or quantities delivered by barge or truck.

Some suggest that continued price increases for exports from the continent could exert upward pressure on sales within the region.

The differential between domestic ex-tank or FCA prices and exports is now assessed at €65/t-€95/t.

Group II sold in Europe is mostly imported from other regions, and refiners producing some of these oils have announced markups in source markets for the lighter-viscosity grades. These increments may be starting to filter through to Europe in price discussions between distributors and buyers. At the same time, heavier grades are under pressure for downward adjustments.

For the moment, prices for heavy Group IIs are unchanged, while light-vis grades are around €25/t-€40/t higher on an CIF basis. Light grades are $655/t-$685/t and 500N and 600N are $825/t-$865/t, basis CIF Antwerp-Rotterdam-Amsterdam, with the lower end of the latter spread applying to 500N grades. FCA prices ex-European main supply hubs are now assessed at €755/t-€790/t for light-vis oils while heavier grades are unchanged at €855/t-€890/t.

Surprisingly, European Group III markets are reported stable. A surplus of supply does appear to be developing again but producers are contending that global demand will continue expand at around 3.5% per year to soak up the over-production. It does seem plausible that if prices fall because of a glut, Group III oils will look all the more attractive as an alternative to Group I and II.

Group III prices are steady again this week with 4 centiStoke and 6 cSt grades at $795/t-$825/t €690/t-€717/t for ex-tank euro sales, basis FCA Northwestern Europe. Products with full slates of finished lubricant approvals remain at €790/t-€825/t for 4 centiStoke and 6 cSt grades and €765/t-€785/t for 8 cSt, FCA Antwerp-Rotterdam-Amsterdam. Sales to major buyers in bulk cargoes may be discounted $60/t-$75/t from the aforementioned ex-tank levels.

Baltic and Black Seas

Baltic prices for Russian exports are reportedly stable this week with a steady flow of inquiries for large parcels going down to West Africa and smaller spot cargoes of 3,000 to 6,000 tons going into Antwerp-Rotterdam-Amsterdam and the United Kingdom. In addition, contract barrels continue traveling into Antwerp-Rotterdam-Amsterdam, though the pace has fallen due to the summer slow-down in mainland European markets. One of the two inquiries to load ex-Riga, Latvia, for discharge into the U.S. Gulf Coast has actually been fixed firm, and 3,000 tons of cargo will load during late August for this unusual movement.

Inquiries from Nigeria and other parts of West Africa include cargoes ranging from 5,000 tons for two grades, up to a large cargo of around 14,000 tons, consisting of three main Russian grades and bright stock loading out of the lower Baltic. Solvent neutral 150 continues to be in demand from the Baltic, due to tightened availability from mainland European sources.  

Working on a netback basis for the large Nigerian cargoes, FOB prices for SN150 are assessed at $625/t-$645/t with SN500 at $685/t-$725/t. SN900 is posted between $795/t-$825/t and bright stock at $860/t-$890/t.

Black Sea shipping reports confirm another cargo of around 6,000 tons loading out of Kavkaz, Russia, but this time in addition to Antwerp-Rotterdam-Amsterdam, a second option is for part of the cargo to be discharged into the east coast of the U.K. Black Sea trade sounds thin this week, with few Turkish importers reporting new business for Russian oils or cargoes coming from the Mediterranean.

Russian exports of SN500 are reportedly being offered at around $765/t, CIF, but counteroffers from buyers are some $20/t-$25/t lower. Group I grades being arranged to load from Mediterranean sources have been reported at $695/t-$710/t for SN150 and $775/t-$795/t for SN500/600, basis CIF Turkish main ports. Bright stock from Mediterranean sources is said to be offered at $855/t-$875/t.

Middle East

Red Sea trade has no new cargoes being reported this week, but receivers in Sudan and Aqaba, Jordan, are sending out loose inquiries, perhaps only for price checking purposes. There are no further reports of material leaving Yanbu’al Bahr or Jeddah, Saudi Arabia, for points east.

Middle East Gulf regions are quiet other than the usual raft of Group III export cargoes being worked from United Arab Emirates and Bahrain. The Iraqi loading out of Basra appears to have disappeared of the radar and may have been only a rumor. 

There are a number of reports of large quantities of Iranian base oils being prepared for loading from Bandar-e Emam Khomeyni and Bandar Bushehr going to receivers in the U.A.E., Pakistan and the West Coast of India. Some sources have suggested that up to 30,000 tons is being readied in shore tanks, although sellers have not confirmed this figure, which would be an extraordinary quantity. Sources have suggested that prices may have been trimmed to seal transactions, with premium SN500 being pitched at around $620/t and smaller quantities of SN150 at around $600/t, FOB equivalent.

At the same time prime Group I cargoes are loading out of the Mediterranean for discharge into Jebel Ali, U.A.E., although this may be intra-affiliate trading by oil majors. Group III cargoes are reported moving to China from Sitra, Bahrain, and along normal routes from Al Ruwais, U.A.E., into Mumbai anchorage.

FOB prices for 4 and 6 cSt grades loading out of Al Ruwais are maintained this week at $645/t-$660/t. FOB levels for Bahrainian material, which carries full slates of approvals, are assessed higher at around $755/t, for 4 centiStoke and 6 cSt $710/t-$725/t for 8 cSt. These prices are based on a netback formula using nominal freight, general handling and marketing costs for cargoes being delivered into Europe, the U.S., the West Coast of India, and the Far East. They apply to bulk cargo sales to large buyers, not to individual smaller receivers on an ex-tank or FCA basis, where prices are much higher.

Middle East Gulf markets for Group II grades appear to be stirring, with Far East and U.S. producers making offers to receivers in the U.A.E. Group II grades may now be available ex-Yanbu, though this is unconfirmed.

Group II imports from Far East and U.S. sources and a European hub are offered out of U.A.E. storage on an FCA or delivered basis. As in Europe, small price hikes are appearing for light-vis grades, while 500 neutral and 600N appear to be coming under pressure. Light grades are currently assessed at $825/t-$850/t and 500N/600N at $885/t-$910/t, CIF Middle East Gulf locations. 


As noted last week, South Africa shipping sources have confirmed another large cargo containing base oils from an oil major discharging into Durban, South Africa, probably at the end of August or early September. As with previous cargoes, this one will load out of Rotterdam and Fawley, U.K.

North African trade for Group I into receivers in Libya, Morocco and Tunisia is seeing further inquiries for parcels to arrive during September, loading out of Italian and Spanish supply points.

More cargoes have been announced for discharge into Apapa, Lagos, with some 30,000 tons confirmed this week. One large slug of around 15,000 tons will load ex-U.S. Gulf Coast, whilst another will load oils from Sicily and the Spanish Mediterranean coast. These cargoes are in addition to the 50,000 tons of material indentified last week, and brings the total of base oil marked for import into Nigeria during August and September to around 140,000 tons. There are still Baltic inquiries that should be completed this week, so the figure may rise to 150,000 tons.

This is a considerable chunk of the available Group I market, and it is this outlet that is believed to be keeping both European and U.S. Group I prices attractive to producers. Any thoughts that producers may have had of reducing output levels to meet lower demand during the second part of this year have been dispelled just by the pace of imports into West Africa.

As mentioned in last week’s column, with Group III markets perhaps going long, receivers in Nigeria are considering importing parcels of these grades if prices are exceptionally competitive and where technical benefits can be shown. The use of Group III in this market will be limited initially but could provide opportunities for the future. Oil majors with blending plants in Nigeria may be the first to trial this business.

Prices are left unchanged this week except for SN150, which is now $790/t-$810/t for prompt loadings on a CIF/CFR basis. SN500/600 is $858/t-$865/t and SN900 $945/t-$965/t. Bright stock from mainland Europe or the U.S. is $1,070/t, while bright stock from elsewhere is $1015/t-$1045/t.

All prices for Nigeria are for base oils delivered CIF/CFR Apapa, Lagos.

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