A mechanic poured motor oil into a funnel at a Chevron station in Albuquerque, New Mexico, in July 2016. Since the onset of conflict with Iran, the cost of group III base oil, a key component in motor oil blends, has surged by 175%, as reported by a trade group.
The conflict in Iran has driven up prices for crude oil and its derivatives like gasoline, diesel, and jet fuel. These price hikes have often made headlines, highlighting the economic impact. However, the rising price of motor oil, crucial for your vehicle’s engine health, has received less attention. Upcoming oil changes are expected to cost more. Even if a potential agreement is reached soon, the issue of high motor oil prices is unlikely to resolve quickly.
According to Amanda Hay, an analyst from Independent Commodity Intelligence Services, the base oil used in synthetic motor oil has tripled to record levels. The U.S., despite being a net exporter of fuels such as gasoline and diesel, is a net importer of base oil. Most notably, the U.S. does not produce a large volume of oil needed for synthetic motor oils. Previously considered a premium product for luxury vehicles, synthetic motor oil is now increasingly necessary for everyday cars. Although termed “synthetic,” this oil is derived from crude oil or natural gas, but its manufacturing process ensures it lasts longer. U.S. refineries largely lack the capability to produce this oil.
Hay notes that the U.S. has the world’s largest trade deficit for “group III base oil,” vital for synthetic motor oils. Holly Alfano, CEO of the Independent Lubricant Manufacturers Association, mentions America’s dependence on the Middle East for more than 45% of its group III imports. This trade faces disruptions due to reduced traffic in the Strait of Hormuz. Further complicating matters, the Shell Pearl GTL plant in Qatar, the world’s biggest facility for this oil type, suffered significant damage from an Iranian missile attack, reducing its output for at least a year.
Alfano discusses alternatives, noting South Korea as another key supplier. However, South Korea currently relies on Middle Eastern crude oil. Many U.S. refineries produce “group II” base oils, used for conventional motor oil. Yet, choosing to manufacture these oils diverts resources from producing more lucrative diesel fuel, creating shortages in group II supplies.
If the Strait of Hormuz reopens, base oil supplies from South Korea could recover. Yet, disruptions from the Pearl plant closure and prioritization of diesel fuel persist. New U.S. plants under construction to produce more group III oil are expected to open only in 2027 or 2028. As Hay highlights, fewer and costlier options seem inevitable, leading to an anticipated rise in lubricant prices.
While this situation doesn’t imply an outright shortage, drivers might encounter supply “gaps,” especially for motor oils branded by specific automakers, Hay clarifies. Price increases are anticipated across the market. The industry has relied on base oil stockpiles to buffer retail customers, yet these reserves are depleting, according to Alfano.
Mechanics, like Nathan Matheson from Poolesville, Maryland, note the rising costs. He has observed a 60% increase in regular motor oil prices. Matheson maintains his oil change prices, bearing the rising expenses for now, despite increasing tariffs on auto parts exacerbating the strain. Matheson remarks on the rising costs of consumable parts like oil filters and brake pads due to tariffs, impacting mechanics and drivers alike.
Onur Azeri, managing a mechanic shop in Sonoita, Arizona, emphasizes the broader concern about the cost of parts affecting clients. Rising fuel prices daily compound such challenges, prompting customers to drive less and resort to alternatives like electric bikes. Matheson sees more drivers eager to delay repairs, questioning necessary maintenance. In his experience, neglecting preventative maintenance often leads to costly major repairs.
Alfano advises inspecting vehicle manuals for recommended motor oil. Follow these guidelines, avoiding substitutes without verifying performance standards. Additionally, for high-end synthetic oils, check manuals for extended oil change intervals beyond the outdated 3,000- or 5,000-mile benchmarks.
Matheson encourages seeking multiple opinions for vehicle maintenance, discerning essential work. While postponing work is understandable, avoiding preventive maintenance risks expensive repairs. Matheson reflects, mentioning customers ignoring minor maintenance needs, resulting in costly outcomes.