If you've been getting quotes from your engine oil supplier over the past few weeks, you've probably noticed something off — the same SKU coming back with a different price two or three times in a month, and not by a small margin either.
Your supplier isn't just testing the market. Something real happened.
Here's the background, no sugarcoating it. On February 28, 2026, the United States and Israel launched military strikes against Iran. Iran responded by effectively shutting down commercial traffic through the Strait of Hormuz — a waterway that normally carries roughly a fifth of the world's seaborne oil trade. Tanker traffic collapsed almost immediately after the conflict began, and from April 13 to May 29 the US also blockaded Iranian ports, adding another layer of disruption on top of an already stressed system.
For the lubricant industry, the sharpest impact landed on Group III base oil — the primary building block of modern full-synthetic and semi-synthetic engine oils. The Independent Lubricant Manufacturers Association (ILMA) reported that roughly 44% of U.S. Group III supply was directly affected by the disruption. In Northern Europe, Group III prices climbed nearly 100% since the start of the conflict, and U.S. wholesale Group III prices briefly broke past $10 per gallon — a historically extreme level. South Korea, one of the world's largest Group III exporters, introduced export caps on refined petroleum products during the crisis to protect domestic supply, tightening global availability even further.
The effects have already reached automakers. Nissan cut 5W-30 allocations to dealers down to 70% of last year's volume, and 0W-20 down to 55%. Toyota issued substitution guidance for low-viscosity oils like 0W-8 and 0W-16 to its service and parts network.
The better news: on June 17, the U.S. and Iran signed a memorandum of understanding opening a 60-day negotiation window, and tanker traffic through the Strait began recovering in late June. But this recovery is fragile — just last week the U.S. carried out fresh strikes on Iran after an attack on a commercial vessel, a reminder that this "de-escalation" could reverse quickly. ILMA's own assessment from May put full normalization no earlier than mid-2027.
What this means for importers: this isn't a "wait and see if prices come back down" situation. For at least the next six to twelve months, supply reliability itself is a competitive advantage — not just a cost line.
The data shows the risk is concentrated in specific viscosity grades and formulations, not spread evenly across the board:
| Product Type | Exposure Level | Why |
|---|---|---|
| 0W-8 / 0W-16 / 0W-20 low-viscosity full synthetic | High | Heavily dependent on Group III (or higher) base stocks with little room to reformulate |
| 5W-30 full synthetic (OEM-certified) | Medium-High | Some Group III dependence, but partial Group II substitution is possible, so exposure is somewhat lower than ultra-low-viscosity grades |
| 10W-40 / 20W-50 conventional-viscosity engine oil, motorcycle oil | Low-Medium | Relies mainly on Group II base oil, which has been comparatively less disrupted |
| ATF / CVT / DCT transmission fluids | Medium-High | Spec-driven formulations leave little room for substitution |
The short version: the lower the viscosity and the higher the synthetic content, the more exposed the product is right now. If your market runs mostly on conventional-viscosity engine oil and motorcycle oil across Southeast Asia, Africa, or Latin America, your direct raw-material risk is comparatively manageable. But if a meaningful share of your customers require 0W-20, full synthetic, or OEM-certified products, it's worth confirming production allocations with your supplier for the second half of the year now — not after your order gets pushed back in the queue.
A quote sheet won't tell you what you need to know. These questions will:
A supplier that genuinely understands its own supply chain will be able to walk you through its base oil sourcing structure and exposure without hesitation. A supplier that can only talk about price competitiveness is the one most likely to stumble during this stretch.
This isn't a short-term price blip. Even with a smooth resolution in the Strait of Hormuz, ILMA's own assessment doesn't expect full normalization until roughly mid-2027. Waiting until your primary supplier actually runs short before looking for a backup means you're already too late.
A more practical approach:
Step 1: Test 3-5 priority SKUs first. Don't try to qualify a full product range at once. Pick the volume drivers for your market — 15W-40 diesel engine oil, 10W-40 motorcycle oil, or whichever grade you've identified as highest-risk (5W-30/0W-20, for example).
Step 2: Get the documents, then run a small trial order. Check four things: on-time delivery, whether the physical product matches the COA, whether packaging fits your local market, and how responsive the supplier is after payment.
Step 3: Only scale up once the first order goes smoothly. Supplier reliability takes time to verify — one quote round isn't enough to make that call.
When you're buying through multiple trading layers, a delay is hard to trace back — you can't easily tell whether the problem is raw material shortage, a formulation change, production scheduling, or export paperwork. That chain gets even harder to manage during a period when base oil substitution and reformulation are exactly where things tend to break down.
Factory-direct supply isn't valuable because it's cheaper. It's valuable because the information chain is shorter — changes in base oil sourcing, formulation adjustments, and batch consistency can all be confirmed through the same communication line, and problems are easier to pinpoint. That said, "factory-direct" isn't automatically reliable — capacity, documentation completeness, and export experience still need to be verified case by case.
TERZO is a factory-based lubricant supplier serving B2B importers and distributors, with a product range covering:
During this period of base oil supply volatility, TERZO can provide batch-level TDS/SDS/COA documentation, transparency on base oil sourcing structure, and support for small mixed-SKU trial orders. If you'd like to start with a trial order to validate supply stability before scaling up, reach out through our Business Cooperation page or Distributor Program with your target market and product range, and our team will follow up with specific recommendations rather than a generic quote.
What caused the 2026 base oil shortage? After the U.S. and Israel launched military action against Iran on February 28, 2026, Iran effectively shut down transit through the Strait of Hormuz, a waterway that normally carries about a fifth of the world's seaborne oil trade. The disruption hit Group III base oil production regions especially hard — the Middle East directly, and South Korea indirectly through its reliance on Middle Eastern crude — tightening global synthetic lubricant feedstock supply.
Which engine oil products are most exposed? Ultra-low-viscosity full synthetics like 0W-8, 0W-16, and 0W-20 are the most exposed because they depend heavily on Group III base stocks. Conventional-viscosity oils like 10W-40 and 20W-50, which rely more on Group II base oil, have been comparatively less disrupted.
When is this expected to normalize? The U.S. and Iran signed a memorandum of understanding on June 17, and Strait of Hormuz traffic began recovering in late June, though the situation remains unstable. ILMA's industry assessment puts full supply normalization no earlier than mid-2027, and that timeline depends heavily on how the negotiations play out.
Should importers stock up now or wait for prices to drop? Rather than betting on price direction, it's more practical to confirm your supplier's production allocation and base oil sourcing plan for the second half of the year, and to line up a second supplier in parallel — that protects you from a single point of failure regardless of which way prices move.
How does factory-direct supply help during this period? Mainly through a shorter information chain — changes in base oil sourcing, formulation adjustments, and batch consistency issues can be confirmed and resolved faster than when working through multiple trading intermediaries.
Does TERZO support OEM and private label cooperation? Yes, including product selection, packaging design, technical documentation, and export logistics coordination.
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