INSIGHT Base Oil Report Eashani Chavda, Markets Editor, ICIS

Europe European domestic Group I and II spot prices were flat in early July, though there is upward pressure due to higher feedstock costs and firming demand. There’s a push from sellers for double-digit increases in July, however these have been slow to take hold in the market as remaining supply from Q2 is yet to be consumed.

Demand is rising gradually across the domestic market, with Group III seeing the fastest recovery so far. Group III availability has tightened due to limitations at some suppliers, which is also supporting price increases. Group III spot prices have returned to levels seen at the start of 2020, before the coronavirus downturn hit the market. Demand is expected to firm this quarter, particularly due to easing travel restrictions in Europe and increased consumption from the automotive sector.

Europe export, Baltic Sea export and Black Sea export were stable at the start of July. European export supply is tighter, with at least one refinery expected to be sold out until September. Demand remains subdued for European and Baltic Sea exports, due to fears of a second wave of the coronavirus limiting consumer confidence. Black Sea export demand is mixed, though activity has been limited as lower pricing in comparison to Baltic Sea has made this market less attractive for Russian producers.


US domestic and export prices were steady in early July with demand showing signs of slow recovery. Buyers are restocking to cover obligations, but wider economic uncertainties are limiting interest to shorter- term commitments. Demand has strengthened in the key Mexico market, where buyers are restocking both paraffinic and naphthenic lubricants. Refinery rates, as well as downstream production rates, continue to rise on strengthening demand.

There are no expectations that demand will increase until automotive manufacturers begin production again, which is anticipated sometime in May in the US.


In Asia, prices were stable-to-firm depending on the grade. Group I and II prices firmed in early July on the back of spot limitations and scheduled turnarounds. Group III prices were flat, amid muted talks for South Korean material. Demand is expected to pick up outside of China, with the easing of lockdown measures and gradual resumption of plant operations.

Middle East

Middle East base oil prices were stable for Group II and III due to limited price discussions and a lack of available spot cargoes in early July. Meanwhile Group I prices firmed, driven by higher priced deals for Iranian- origin cargoes amid emerging supply shortages in the local market in the main trading hub, the United Arab Emirates (UAE).




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