We need to correct something we said a few weeks ago. When the U.S. and Iran signed a memorandum of understanding on June 17 and a 60-day ceasefire followed, we treated that as the start of a slow recovery — cautious, but a recovery. That read hasn't held up. Over the past several days, Iran struck three vessels transiting the Strait of Hormuz, and the U.S. responded with fresh strikes and a reinstated naval blockade. Iran has reportedly hit a UAE-registered tanker, killing a crew member. Crude oil jumped accordingly: WTI futures rose from around $70/barrel on July 7 to $79.34 by July 14, and Brent climbed from $76 to $85.76 over the same window. This is not the recovery story we described before — it's a relapse, and it deserves an honest update.
The ceasefire didn't fail quietly. Trump briefly floated a 20% "protection fee" on all vessels transiting Hormuz, then reversed the plan within days — a level of policy whiplash that tells you how unsettled this situation still is. Talks between Washington and Tehran appear to have broken down entirely, with both sides trading strikes daily and no clear path back to the table. For anyone who was starting to relax about base oil availability because of the June truce: that was premature, and we'd rather say so directly than let last month's optimism sit uncorrected on our site.
Here's something we hadn't factored into our earlier coverage: Ukraine's long-range drone campaign — with a reported range of up to 2,500 kilometers — has been hitting Russian refineries, including Gazprom Neft's Omsk plant along with facilities tied to Lukoil, Rosneft, and Bashneft. Russia produces meaningful volumes of Group I and Group II base oil, and this is a second, entirely separate conflict now squeezing global supply at the same time as the Gulf crisis. When two unrelated wars are hitting refining capacity simultaneously, "wait for the Middle East to settle down" stops being a complete plan.
We've been citing "about a fifth of global Group III capacity" for weeks. Here's what that's actually made of: Shell and QatarEnergy's Pearl GTL plant in Qatar produces roughly 300,000 tonnes/year of Group II and 1.07 million tonnes/year of Group III — a genuinely major single facility. One of its two production trains has been offline since a March 19 attack, and sources now say the specialized equipment involved may need to be replaced rather than repaired, which could keep it down for a year or longer. ADNOC's Ruwais complex in Abu Dhabi runs a 600,000-tonne/year Group II/III plant, currently operating at reduced capacity. Bapco's Sitra facility in Bahrain, a 400,000-tonne/year Group III plant, remains under force majeure with no official update on its actual production status.
even in the best case, where Hormuz reopens tomorrow, ADNOC's first Group III shipment to the U.S. wouldn't arrive until the end of August. Recovery isn't a switch that flips when the fighting stops — it's a shipping and production lead time measured in months, layered on top of however long the fighting actually continues.
Dealers for several major automakers have received formal notices of temporary motor oil supply shortages tied to "production and logistics constraints within the global petrochemical supply chain." Lubricant manufacturers — a list that includes TotalEnergies, Castrol, Shell, Chevron, ExxonMobil, Valvoline, Phillips 66, Citgo, and many others — have pushed through three separate rounds of price increases since the war began, with some increases reaching 26% to 35% depending on the product. Some smaller blenders are reportedly considering shutting down entirely rather than keep absorbing raw material costs they can't pass on to customers. This is no longer an abstract "supply chain risk" conversation. It's showing up as real notices in real dealer inboxes.
Ruwais, Sitra, Pearl GTL, and the Hormuz blockade all describe a bottleneck in one specific corridor. TERZO's production is based in China, sourcing through China's own domestic refining network — not through the Gulf facilities that were damaged or a shipping lane currently under naval blockade. We're not waiting on a vessel that has to clear Hormuz to keep our lines running, and that's not just our own claim: Chinese Group II producers have kept offering spot export cargoes into India and Latin America even as Middle East exports froze. We're not fully insulated — additive costs and freight are up everywhere, and we won't pretend otherwise — but the base oil itself has stayed accessible to us through this disruption in a way it hasn't for Gulf-dependent suppliers.
we can hold production continuity on core lines like 0W-20 and 5W-30 without the multi-week uncertainty Gulf-sourced competitors are facing, and we're keeping price validity honest rather than padded for raw-material risk we're not carrying. If your current supplier is Gulf-dependent and your next reorder date is unclear, talk to our team about your product mix — we'd rather walk through what we can actually commit to than offer a general "supply is stable" reassurance.
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