The next supply-chain squeeze may hit motor oil
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Motor oil shortages tied to Group III base oil disruptions could be looming Photo: Andrea Morales/Bloomberg via Getty Images
Motor oil could become the next supply-chain headache as major companies warn that Middle East turmoil is squeezing key ingredients used in synthetic lubricants.
Why it matters: Drivers, repair shops and auto suppliers could soon see higher prices, reduced selection and temporary out-of-stocks for some synthetic motor oils.
Driving the news: Executives at Shell, Valvoline, O'Reilly Automotive and other companies are warning investors about lubricant cost spikes and pressure on synthetic motor-oil supply chains.
- The comments are an early sign that the effects of the Middle East conflict may spread beyond gasoline prices.
The latest: The Independent Lubricant Manufacturers Association says refinery outages and shipping disruptions through the Strait of Hormuz are tightening supplies of Group III base oils, a key ingredient in many modern synthetic oils.
- Industry groups and analysts say lighter-viscosity synthetic oils — including 0W-8, 0W-16 and certain 0W-20 grades commonly used in newer vehicles — are most vulnerable to disruption.
- "Actual shortages are starting to appear" for some synthetic oil products, Amanda Hay, global lead for base oils at ICIS, told Axios, adding that "security of supply is the chief concern for industry players."
The big picture: The lubricant industry relies heavily on imports from the Middle East and Asia-Pacific for Group III base oils, a key ingredient in many of those modern synthetic motor oils.
- ILMA noted that recent attacks and supply disruptions have sidelined roughly 44% of U.S. Group III supply.
- Hay said Group III base oil prices have climbed to "more than $10/gallon" — historically high levels — and that global supply levels are expected to "deteriorate rapidly through 2026," with the market remaining undersupplied through 2027.
Between the lines: Tom Glenn, a longtime lubricant-industry analyst and publisher of JobbersWorld, told Axios he would not yet characterize the situation as a "broad retail shortage," even as parts of the supply chain begin operating "defensively."
- Glenn said "availability is beginning to matter as much as — and in some cases more than — price" as suppliers move to protect access to approved synthetic formulations.
What they're saying: Companies across the energy and automotive supply chain are signaling growing stress in the lubricant market.
- O'Reilly Automotive warned that "the conflict in Iran and resulting constraints on global oil supply have the potential to be disruptive to certain categories, particularly motor oil."
- Valvoline said it has "started to see costs increase" and is working with suppliers to "mitigate any supply constraints."
- Shell disclosed that its lubricants business lost feedstock supply tied to the Qatar disruption and that customers accelerated purchases because "they saw the problem and were worried about it."
Reality check: Consumers are more likely to notice reduced product selection, temporary out-of-stocks in specific viscosities, fewer promotional discounts, delayed replenishment and higher prices — rather than a broad disappearance of motor oil from shelves, Glenn said.
The bottom line: The next supply-chain squeeze may not show up at the gas pump — but during your next oil change.
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