A base oils shortage threatens luxury auto giants
Ferrari SF90 XX Spider limited edition hybrid supercar is parked on the pavement as a red Ferrari passes Bond Street on January 4, 2026 in London, United Kingdom.
Mike Kemp | In pictures | Getty Images
The global base oil shortage is starting to reflect on luxury car drivers; Analysts and industry groups warn that stocks may soon run out if the Iran war continues for a long time.
While the supply shock extends far beyond crude oil, fertilizer and helium, ongoing disruption in the strategically vital Strait of Hormuz has triggered what the International Energy Agency has described as “the greatest energy security threat in history.”
Base oils are the primary ingredient used to produce high-performance lubricants for motor oils and industrial fluids.
Group III and Group IV base oils, such as polyalphaolefins (PAO), are essential raw materials for synthetic finishing lubricants used for automotive purposes; PAO is especially important for luxury vehicles.
If nothing arrives, stocks will run out within a month, resulting in reduced production of finished lubricants.
Gabriella Twining
Head of base oils pricing at Argus Media
According to Argus Media, the Gulf region accounts for 20% of global Group III base oils capacity and accounted for 72% and 47% of Group III base oil imports from Europe and the US respectively last year.
Supercars, especially common in major cities such as London, Monte Carlo and Los Angeles, rely on these niche products because they can withstand extreme heat, high revolutions per minute (RPM) and intense pressure.
“As the name suggests, they actually form the basis of all finished lubricants for automotive, industrial, aerospace, marine… You name it, if something moves, it’s going to need a lubricant, and it’s made from a base oil,” Gabriella Twining, head of base oils pricing at Argus Media, told CNBC in a phone interview.
Engine oil sold next to cigarette packs at a stand at the Bara taxi station in Soweto, near Johannesburg, South Africa, on Wednesday, February 18, 2026.
Bloomberg | Bloomberg | Getty Images
In recent weeks, base oil prices as assessed by Argus have risen to record levels; Group III base oil prices in Northern Europe have increased by almost 100% since the beginning of the Iran war.
It comes at a time when shipping traffic in the Strait of Hormuz has been disrupted for a long time. damage Shell’s Pearl Gas-to-Liquids Facility in Qatar Due to Iran’s Missile Attacks and Manufacturers’ “Force Majeure” Declarations bahrain And United Arab Emirates.
South Korea, the global leader in base oil production and a major exporter of Group III base oils, has recently introduced Mandatory export ceilings were introduced on refined petroleum products to support domestic base oil supplies in the midst of the crisis.
“These historic price increases have to be paid for by someone, and that will be passed on to the finished lubricant and the buyer of the finished lubricant,” Twining said. he said.
“If nothing arrives, stocks will run out within a month, which will disrupt finished lubricant production. You can postpone the oil change, but it will be more expensive and there will be less availability,” he added.
Rico Luman, senior industry economist at ING who studies transportation and logistics, said the current oil market contraction and heavy base oil footprint in Asia and the Middle East will “absolutely” lead to supply shortages.
“There are stocks of relatively low-turnover products in the supply chain, but delivery times can certainly extend, which could jeopardize replenishment. And of course, prices will see the impact of Asian dependence as well as general oil price increases,” Luman told CNBC via email.
‘Productive and sober’
Independent Lubricant Manufacturers Association (ILMA) described A recent meeting with US lawmakers on the severity of base oil supply disruptions “was both productive and sobering, with all parties acknowledging the severity of the situation and the lack of clear near-term solutions.”
Stating that approximately 44% of US base oil supply typically originates from the Persian Gulf, the group said on April 8 that market impacts have already begun to emerge and disruptions have spread across many sectors.
ILMA, which represents independent lubricants manufacturers, also said it expects the U.S. base oil market to remain under continued pressure through at least 2027, as members brace for rising costs throughout the supply chain.
ILMA CEO Holly Alfano noted that the lubricants industry is currently grappling with three compounding pressures, noting that roughly 40% of global Group III supply from the Persian Gulf is offline or unable to ship, South Korean refineries are constrained by crude oil shortages, and refineries are diverting Group II feedstocks into fuels.
“In total, these dynamics are stressing nearly three-quarters of U.S. Group III imports and also eliminating the industry’s ability to substitute Group II base oils,” Alfano told CNBC via email. he said.
“We are entering hurricane season further increasing the risk; even a single storm impacting the Gulf Coast could destroy 30-40% of U.S. Group II capacity and an additional 10% of Group III capacity, further tightening an already strained supply chain,” he added.
