The Iran war triggers an "oil crisis": Prices of Group III base oils soar nearly threefold, global automakers shift to "new formulations."

According to reports, due to the intensified shortage of motor oil caused by the Iran conflict, automotive manufacturers such as Stellantis (STLA.US) and Volkswagen are turning to new lubricant blends. The supply chain for high-quality Group III base oils, used for making motor oil, was severely disrupted after Iran attacked Shell's (SHEL.US) gas-to-liquids plant in Qatar in March. Prices for Group III base oils in Europe and the United States have nearly tripled from pre-war levels, reaching about $4,000 per ton. With high-quality base oil inventories exhausted, automakers have sought other lubricant suppliers. However, the supply from these alternative sources remains very tight. Holly Alfano, CEO of the Independent Lubricant Manufacturers Association, stated, "Supplies from other vendors are also limited, and any further shipping disruptions, refinery shutdowns, or other supply shocks could quickly worsen the situation; the industry is left with almost no room for error." Gabriella Twining, global head of base oil pricing at Argus Media, noted that some Middle Eastern Group III base oil suppliers in Europe and the U.S. announced supply disruptions due to force majeure after selling out. "Even if the Strait of Hormuz opens tomorrow, we expect Europe and the U.S. wont receive their replenishments until at least October," Twining warned. Stellantis informed the media that the company is evaluating "reformulated lubricants" and has identified alternative products that meet industry standards, adding that its focus remains on "minimizing any impact on vehicle maintenance activities." Volkswagen stated that it has secured supply for now and is evaluating other sourcing options that meet its "technical specifications and quality requirements." Toyota Motor Corp. Sponsored ADR (TM.US) has also found alternative supply sources, while Suzuki Motor CEO Toshihiro Suzuki informed shareholders that the company is working to diversify its base oil suppliers. In May of this year, Nissan notified its dealers that "the capacity for most lubricant products has been reduced." Therefore, the company stated it would limit its supply of high-quality motor oil and seek alternative sources.