On February 28, 2026, the U.S. and Israel launched strikes against Iran. Iran retaliated against U.S.-linked military and energy infrastructure across the Gulf, and shipping through the Strait of Hormuz — the channel carrying roughly a fifth of the world's oil and gas trade — halted almost immediately. Within days, Brent crude jumped from the $60-70/barrel range to above $93, and by early April had touched $110; by late April, industry pricing services were citing figures near $130.
The Group III damage was concentrated and specific. Abu Dhabi's ADNOC Ruwais refinery (roughly 10,300 barrels/day of Group III capacity) was hit by a drone strike and fire. Bahrain's Bapco Sitra refinery (around 8,200 bbl/d) suffered an attack on its Maameer complex and declared force majeure. Shell's Pearl gas-to-liquids plant in Ras Laffan, Qatar — a roughly 1.1-million-metric-ton-per-year Group III producer and one of the highest-quality base oil sources in the world — had one of its two production trains damaged, with Shell indicating repairs could take up to a year. Lubes'N'Greases, the industry's trade press, put the combined impact at roughly 20% of global Group III capacity offline.
A ceasefire was reached June 21, and ADNOC has been working to ramp production back up since. But a physically damaged refinery doesn't come back online because the shooting stopped — repair timelines are measured in months to a year, not weeks. That's reflected in the numbers: the most recent weekly Asia base oil price report available shows Group III prices still rising week-over-week in early July, with 4 cSt grades up $40-50/tonne and 6 cSt up a similar amount. This is not a market that has normalized.
South Korea, one of the world's largest Group III exporters, added export caps on refined petroleum products to protect domestic supply during the crisis — tightening global availability further, independent of the Gulf damage.
Industry-wide, base oil inventories in tank storage across Europe and the US were estimated at around two months' worth when the crisis hit — most of it cargo already in transit before the conflict began. Once that buffer draws down, blenders have to prioritize which products they can keep making, and everyone downstream feels it.
For an importer, that shows up as a market-protection problem, not a warehouse problem: workshops need oil every day, fleets run on maintenance schedules, and retailers need shelf stock. None of them wait patiently for your next shipment — they test another brand, and once a workshop switches, you don't just lose one order, you lose the shelf position and the habit.
Products leaning on Group III are the ones to watch closely: low-viscosity and full-synthetic passenger car oils (0W-20, 5W-30, full-synthetic 5W-40), premium motorcycle oil, ATF/CVT/DCT fluids, and CK-4 diesel oil positioned for extended drain intervals. More conventional grades — 15W-40 or 20W-50 diesel oil, standard hydraulic oil — have more formulation flexibility and are less directly exposed, though they're not immune to additive, packaging, and freight cost pressure moving through the same system.
Splitting your own SKU list into three buckets helps here: high-risk products needing early planning, stable fast-movers, and supporting products you can order with more flexibility. Treating every SKU the same way during a period like this wastes attention on the wrong products.
Here's something most sourcing advice misses: ILMA formally asked the American Petroleum Institute to invoke force majeure provisions allowing blenders to substitute base oils or adjust formulations while maintaining compliance during this specific crisis. That means a legitimate, otherwise-reliable manufacturer might be operating under officially sanctioned formulation flexibility right now — not just opportunistic suppliers cutting corners.
The practical implication: an unusually low price during this period isn't automatically a red flag on its own, but it is a reason to ask directly whether the base oil system has changed from what was originally quoted or certified, and to get that answer in writing before committing to a large order — the same base oil verification logic covered in more depth here applies with extra weight right now.
The most common mistake during volatility is reordering only when stock is nearly gone. A steadier structure has three layers: selling stock for daily sales, safety stock to absorb production or shipping delays, and a next-order pipeline — meaning your next order is already confirmed before current stock hits a dangerous level.
To size safety stock realistically, add up your supplier's production lead time, sea freight time, customs clearance, and local delivery — if that full cycle runs 60-90 days, placing your next order with only a month of stock left is already late. Given that the wider industry was working with roughly two months of buffer when this crisis hit, it's worth sizing your own safety stock against systemic fragility, not just your normal month-to-month demand variance — a supplier who's individually reliable can still be caught short by an industry-wide capacity loss they didn't cause.
Testing a second supplier after a shortage hits is too slow — document review, sample testing, packaging confirmation, and first production all take real time. The more useful approach is testing a backup channel now, on a small scale: one passenger car grade, one diesel grade, one motorcycle oil, and an OEM/private label option if that's part of your business — enough to genuinely evaluate quality, documentation, communication speed, and delivery reliability before you're relying on it under pressure.
· Base oil exposure: which of your products lean on Group III, and has your formulation or sourcing changed in the last few months?
· Production capacity: can you confirm current output honestly, not just quote a standard lead time?
· Price validity: how long is this quotation good for, and will you flag a price change before it happens rather than after?
· Documentation: batch-level TDS, SDS, and COA, with production date and batch number — especially important right now for verifying formulation hasn't quietly shifted
· Communication: will you tell us about allocation or delay risk early enough to actually plan around it?
A supplier who answers the base oil and reformulation questions specifically — not with a generic reassurance — is the one worth trusting with a larger order during this stretch.
If your own supply tightens, communicate before stock actually runs out — distributors and workshops need lead time to plan too. Protect fast-moving SKUs for repeat customers first, and resist the urge to substitute products casually just because something else is in stock: swapping a customer's 5W-30 for a different grade without checking vehicle requirements and climate fit can solve a shortage problem today and create a warranty or performance complaint next month. Managed communication beats a quiet stockout every time.
TERZO supports importers and distributors across car engine oil, diesel engine oil, and motorcycle oil, with batch-level TDS, SDS, and COA documentation and direct communication on which products carry more Group III exposure right now.
If you're building a backup supply channel or want a direct conversation about current base oil sourcing, reach out through our Business Cooperation page or Distributor Program — or see our wholesale buying guide if this is a first order.
Is the Group III base oil shortage over now that there's a ceasefire? No. The June 21 ceasefire stopped the conflict, but physically damaged facilities — including Shell's Pearl plant in Qatar — need months to a year to repair. Spot Group III prices were still rising week-over-week as of early July.
Which engine oils are most exposed to this shortage? Low-viscosity and full-synthetic products — 0W-20, 5W-30, full-synthetic 5W-40, premium motorcycle oil, ATF/CVT/DCT fluids, and extended-drain CK-4 diesel oil — lean more heavily on Group III. Conventional grades like 15W-40 have more formulation flexibility.
Should importers be suspicious of low prices right now? Not automatically — ILMA requested official flexibility for blenders to adjust formulations during this crisis, so even reliable suppliers may be reformulating under sanctioned terms. Ask directly whether the base oil system has changed, and get the answer in writing.
How much safety stock should importers hold during this period? Enough to cover your full production-to-delivery cycle (often 60-90 days) plus a buffer — sized against industry-wide capacity loss, not just your normal demand variance, since even reliable individual suppliers are exposed to the same systemic shortage.
Should importers build a backup supplier now? Yes — testing takes real time (documentation, samples, first production), so it's safer to validate a backup channel on a small scale before you're depending on it under pressure, not after a shortage has already hit.
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