INSIGHT Base Oil Report

Europe European domestic base oils prices were stable across the board in early January amid limited activity following the holiday period in the region. Production margins were squeezed at the beginning of the year on the back of soaring gasoil prices linked to uncertainty in the Middle East.

Supply levels are ample so far in January across Group I, Group II and Group III, though there are some concerns that availability could tighten later in the quarter.

The recent fire at Total’s Gonfreville plant in France has meant that the plant has severely limited stocks of Group I base oils, with some customers unable to secure material for at least January. This is likely to continue throughout the first quarter.

In the Group III market there are several maintenances planned for the first half of 2020, which could put some pressure on stocks. European and Black Sea export prices were steady at the beginning of January, while Baltic Sea export values edged down slightly on the low end on the back of deals seen in the market.

There is shorter supply in the European export market, particularly of lighter grades, while the Baltic Sea market is balanced.


Domestic and export prices for US base oils were steady at the beginning of January on the back of limited activity. Buying interest is starting to rise as players look to restock following the New Year, though supply still out ways demand in the US market. Turnarounds planned in February could reduce the length currently being seen.

Export spreads are slightly pressured amid the ample availability, though these could tighten in the coming months amid the planned maintenance in February.

Asia Pacific Group I domestic prices in Asia were stable in early January, as were Group III prices. There were limited trades across the markets amid supply issues and political tensions.

There is tightness in the Group I market due to some refiners cutting back base oils production in order to produce more low sulphur fuel oil due to the new IMO 2020 low sulphur regulations.

Group II prices were stable-to-firm as some refiners pushed for higher values amid the jump in crude values brought on by the US-Iran tensions.

Middle East

Prices for Middle East base oils were steady in early January as activity stalled amid rising regional geopolitical tensions. Asian refiners were not offering as much material to the Middle East due to higher prices in domestic markets. The market is not tight however, with deep-sea cargoes fulfilling demand in January.


Samantha Wright Markets Editor, ICIS



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