EMEA Base Oil Price Report 22.03.22

EMEA Base Oil Price Report 22.03.22

The war in Ukraine continues with significant loss of life reported for both sides. The economic consequences of the conflict are yet to be fully visible, but with that Russia could default on loan repayments, the signs are there for all to see.

The economic fallout from the onslaught is being felt by those in the West mainly through rising energy prices, which in turn are being passed on to consumers down the line causing startling inflation figures to be issued from central banks around the world. In the United Kingdom alone, figures in excess of 10% inflation are being considered for later this year and next, and economists warn the the United States could face rates higher than 8%. Sanctions have been issued and applied in a number of areas, including a U.S. announcement of a total ban on energy products coming out of Russia. So far European nations have imposed financial sanctions on Russian banks and individuals but have stopped short of banning imports of Russian crude, natural gas and petroleum products.

This at least leaves the door open for Russian base oils to be exported through traders and distributors located in the Baltic Sea region, although some receivers in Europe and the U.K. have refused to purchase Russian barrels, opting in some cases to take material from suppliers in the Mediterranean.

Interest in such actions may be higher where alternative supplies are available, but European markets are exceptionally short of API Group I base stocks at the moment due to production issues and planned maintenance at a number of refineries.

Base oil prices have started to react to the run-up in crude oil and feedstock costs, with a number of mainstream producers hiking prices across the globe. Some increases have exceeded $100 per metric ton, and producers announced these mid-month rather than wait for the normal adjustment period at month’s end.

Crude costs relented during last week, falling under $110 per barrel after peaking above $130, but costs rose again this week. Dated deliveries of Brent crude hit $114.40/bbl for May front month settlement. West Texas Intermediate crude also rose to $109.85/bbl, still for April front month.

Low-sulfur gas oil had fallen to less than $1,000 per metric ton but surged early this week to $1,165/t for April settlement – still far short of their peak of $1,700/t. All of these prices were obtained from London ICE trading late March 21.

Markets are like a rollercoaster at the moment with the slightest intonation affecting reactive players to produce wild price swings. Many are unable to read this market whilst the turmoil and conflict continues in Ukraine.


European prices for Group I exports have reacted to events during the last two weeks with most producers imposing price increases varying from $100/t up to almost $250/t in one case. Suppliers are commenting that they are raising prices in one hit rather than come back in offers with more increases. Availability remains extremely tight throughout Europe for export destinations, with refiners unable to supply large parcels of Group I material for the traditional export destinations such as West Africa.

Production is down at critical sources such as Livorno, Italy, and Gdansk, Poland, and buyers who routinely accepted Russian barrels have started to decline these offers where possible. Comments received from a number of sources during last week implied that it was becoming a situation of perhaps “shooting oneself in the foot” by not accepting Russian supplies at this time, since alternatives were not available. Hardening attitudes from the markets in Europe, however, may further affect the ability of Russian suppliers to maintain trading.

Offers for export business are few and far between, with any available Group I base oils in only smaller quantities, which can be shipped around Europe but not further afield due to the freight economics, which have spiraled due to higher bunker costs and rising wages for officers and crews.

Solvent neutral 150 prices have risen to between $985 per ton and $1,025/t on an FOB basis, while SN500 prices jumped more than $100/t to $1,095/t-$1,145/t. Bright stock is currently unavailable in many places so it’s prices are estimated on an indication basis at $1,350/t-$1,425/t.

Prices are continually changing at the moment, leading to wider ranges in this column. The price validity of offers is now measured in hours rather than days, with some sellers looking for instant confirmation and finance for any purchase made.

Regional domestic markets around Europe are still managing to get by, although demand has been extremely poor with many blending operations cutting back on finished lubricants, particularly in the automotive sector, where travelling is being curtailed by ever higher fuel prices. Prices for base oils have mounted over the past few weeks, and crude costs are exerting further upward pressure.

A market that is used to monthly prices has now had to accept changes on a weekly or even sometimes a daily basis, especially where contracts or supplies are not quantity specific, leading more to spot trading. Prices have been rising over the past two weeks, with the latest round of increases happening only one week ago.

With limited export transactions, the reported differential from sales within the region is being unchanged at €175/t-€245/t. Whether this differential will remain at this level for more than few days is impossible to say, since the dearth of true export deals makes it difficult to pinpoint prices at this time. 

European Group II prices are also rising, responding to huge increases in crude and feedstock costs. Supplies around the market have tightened, with a couple of major players stating that they could sell more material if it was available. The markets have altered slightly towards Group II base stocks, speeded up by the lack of Group I material around the European markets.

Similarly to Group I offers, sellers are revising prices on a regular basis, only holding levels firm for a number of days before advising the next increase. Levels have moved upwards by more than $100/t during the past week alone, with players trying to predict where the ceiling on prices for these oils may lie.

Group II euro prices are hiked upwards after a slow reaction at the beginning of the conflict in Ukraine. The euro has strengthened a little against the dollar, although no significant movement has happened to alter the direction in which prices are moving. Levels are now assessed at $1,435/t-$1,495/t (€1,295/t-€1,365) for 100 neutral, 150N and 220N and at $1,595/t-$1,645/t (€1,450/t-€1,495) for 600N.

These prices apply to a range of Group II oils from sources in Europe, the U.S., the Middle East and Asia-Pacific.

The Group III market is seeing large replenishment cargoes emanate from European, Middle East Gulf and Asia-Pacific production centers to distribution hubs around the European mainland, and prices at the source are rising, though those increases have not yet filtered to Europe. Many sellers are unable to offer prices going forward for more than a couple of weeks due to the changing nature of the current market. Some have already hiked numbers during the first half of March. 

This market has very little spot trade, and prices that were agreed some time back are being reviewed on a more regular basis than previously. 

There are reports that Russian 4 centiStoke grades are not forthcoming and are not reaching the markets in Eastern Europe. Whether this is as a result of the Ukrainian war, or whether there are other circumstances involved is not yet apparent, but this shortfall could further squeeze a market that is already tight.

Prices for Group III base oils with partial slates of finished lubricant approvals have risen over the past few days to €1,690/t-€1,720/t for 6 and 8 cSt grades and to €1,675/t-€1,695/t for 4 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe. Prices for Group III oils holding full European OEM approvals are at €1,695/t-€1,725/t for 4 cSt and €1,735/t-€1,765/t for 6 and 8 cSt.

Baltic and Black Seas

Traders and distributors based in the Baltic region are still anxiously awaiting to see where the Ukrainian invasion will leave them. With possibility of a total ban on Russian exports receding, they are now at the mercy of buyers and receivers who routinely take cargoes of base oils from these resellers, but these are supplies that have emanated from Russian refineries operated by Gazprom, Rosneft and Lukoil. Some buyers have informed their suppliers that they will not look to take Russian base oils at this time, and will seek alternative sources to purchase quantities of Group I products.

Some buyers, such as some based in Nigeria have come with spurious low offers for Baltic sourced material, claiming that sellers cannot move the material and that in Nigeria they will accept Russian export barrels but only at discounted prices !! There are reported cargoes primed to load for the U.K.’s east coast, Antwerp-Rotterdam-Amsterdam and even for two U.S. ports, the latter of which will not take place due to the total embargo on all Russian exported products into the U.S.

There are other shipping enquiries to move material to Singapore, with one parcel of 10,000 tons loading during March for this destination whilst there are other enquiries for base oils to move to Turkey from a Baltic port. One large enquiry is on th table for 10,000 tons of Russian exports to go into Apapa, but this seems to have stalled, perhaps due to the Ukraine situation.

Baltic Sea FOB prices in respect of Russian exports have been raised, with SN150 moving by around $100/t. and is now assessed between $810/t-$925/t. SN500 is being indicated in offers between $985/t-$1035/t. Quantities of SN900 for the Nigerian market are estimated to fall around $1095/t.

Black Sea and Turkey markets are very quiet with the news that the Tupras refinery at Izmir, has gone down once again, halting the provision of Group I base oil grades for the Turkish market. This situation could have sparked enquiries from a number of sources for Group I grades, those considered are Baltic, Greece and Red Sea sources, but for cargoes of around 3,000 tons in total. the freight element is against any movement from the Baltic into Gebze, Turkey,. 

Turkey is still suffering from rampant inflation and a devaluing currency which could pose problems for Turkish buyers opening letters of credit through the banking system which also has problems accessing foreign currency such as U.S. dollars. This could prevent the imported cargoes from arriving, although without local supplies from Izmir in local currency, the situation may provide little choice for Turkish blenders if they want to remain in business.

Indications for Group I cargoes delivered CIF into Turkish ports of Gebze, Turkey, and Derince are estimated to be around $1065/t in respect of quantities of SN150/100, with SN500 at $1175/t. The imported numbers have risen sharply over the past two weeks, reflecting both higher FOB levels and also increasing freight costs due to bunker costs spiraling.

Imported Group II grades sold by distribution channels on an FCA basis have also moved dramatically upwards and are now currently priced between €1645/t-€1695/t in respect of the three lower vis products with 600N between €1725/t-€1760/t. Group III base oils being sold on the same ex-tank basis have FCA levels at around €1865/t-€1895/t in respect of partly approved grades with fully approved Group III grades supplied from Spain between €1920/t-€1975/t.

Middle East Gulf

A Red Sea source in Saudi Arabia appears to be bucking the trend with a number of planned cargoes of various sizes moving to the west coast of India, United Arab Emirates, Pakistan, Turkey and Egypt, in addition to the parcels being delivered into Durban and also a parcel for mainland China.. To put these exports into context a total of some 50,000 tons of Group I and Group II base oils will load out of Yanbu and Jeddah during March.

No further cargoes have been reported coming out of Iran over the past couple of weeks following the news of two Iranian base oil cargoes which have discharged into the west coast of Indian ports. The two initial parcels were 3,000 tons each of SN500 with a further parcel of 5,000 tons which is currently discharging in Hazira.

The shipping enquiry for a cargo of 5,000 tons of base oil loading out of Hamriyah for receivers discharge in the USG remains open, although sources who would consider this parcel, have denied all knowledge of the cargo and will not accept any Iranian base oils, even with a cert of origin which states that U.A.E. is the source. It is considered extremely unlikely that this cargo will move to the U.S. given the history and provenance of the base oil.

Group III cargoes as exports and also for bridging supplies moving from Sitra down into Hamriyah for distribution, are prominent with a number of replenishment parcels being sent from both Al Ruwais and Sitra for import into northwestern Europe. Around 7,000 tons of three grades will load for Antwerp-Rotterdam-Amsterdam from Al Ruwais around beginning of April, whilst, 6,000 tons will load around end March from Sitra. The second cargo from Bahrain will be under the auspices of a Shell company, whilst the former will be for European distribution by a Swiss trader. Sources in Middle East Gulf have indicated that whilst prices are primarily being hiked as a result of higher raw material costs in production, freight costs have also risen steeply over the past few weeks taking account of higher operating costs for performing vessels.

Netback calculations in respect of Group III base oils loaded out of Al Ruwais and Sitra are again moved sharply upwards, with selling prices escalating in the European market. Sources have again indicated that offer levels will rise by around $150/t, therefore netbacks are also raised by a similar amount. Netbacks are assessed between $2160/t-$2300/t, in respect of the range of 4 centiStoke, 6 cSt and 8 cSt partly-approved Group III base oils.

Nexbase-branded grades from the refinery in Sitra, Bahrain, going into China and Indian markets will achieve similar netback numbers due to keen selling prices in those markets. These grades will netback between $2,175/t-$2,320/t in respect of the range of Group III grades.

Netback levels are based on prices derived and informally assessed from regional selling levels, less marketing, handling and estimated freight costs.

Large Group II cargoes arriving into Middle East Gulf from Far East and now Red Sea sources will provide substantial stocks for the foreseeable future  with a new total of around 35,000 tons.  Group II base oils in Middle East Gulf are resold on an FCA ex-tank or on a delivered basis within Middle East Gulf. Prices are moved higher with levels re-assessed between $1725/t-$1775/t in respect of the light vis grades, with 500N/600N between $1815/t-$1845/t.


An interesting development has been the appearance of a 4,000 tons parcel of bright stock in Egypt which has been put on the market for sale aimed at receivers in Nigeria. However the specification of this base oil is exceptionally poor with high colour, low VI and low viscosity. The price is to be decided in a tender, although at this point not many potential buyers are considering this parcel due to the quality.

Elsewhere in Europe the 42,000 tons cargo for South Africa has loaded with various base oils and some chems. The vessel has sailed for West Africa, discharging into four ports, then proceeding to Durban with the main cargo, then finally to Mombasa where the last part- cargo will discharge.

A trader has purchased three cargoes each of around 16-18,000 tons, the second of which loaded out of an the east coast ofU.S. port at the beginning of March. The first parcel has arrived into Apapa, the third loading out of U.S. Gulf Coast during April.

With supplies from the Baltic region still under threat of sanctions another possibility is being investigated out of Hamburg with a quantity of around 5,000 tons of what is possibly heavy naphthenic base oils. This has always been a possibility to substitute naphthenic grades for Group l, but this deal is unconfirmed as yet, although with opinions wavering regarding taking Russian supplies out of the Baltic this may be a viable option. 

Prices have been lifted for imports in Nigeria with substantial upward movements being accepted by receivers. The option is not having stocks of base oil with European supplies a non-starter with no potential availabilities for large parcels of Group I base stocks.

CIF/CFR prices into Apapa are increased, with indications at $1125/t-$1155/t in respect of quantities of SN150, larger quantities of SN500 are offered at $1195/t-$1235/t with SN900 being priced at $1285/t.

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.