Could the Iran War Cause a Motor Oil Shortage?

The latest hassle facing drivers already grappling with soaring prices at the pump: the prospect of pricier oil changes... or worse. Reports of rationing and looming shortages of motor oil have been circulating on social media for roughly the past week.

Experts say there's no reason for drivers to panic — or deviate from your car's regular maintenance schedule — but whether you take your car to a mechanic for oil changes or do them yourself, there are a couple of important things to know.

"Your next oil change may be be a little bit more of a headache," says Patrick De Haan, petroleum analyst for GasBuddy. "Availability shouldn't be too much of an issue, [but] there may be a temporary replacement in the type of oil you may use in your car."

In other words, "If you’re due for an oil change, you might not want to wait” until the last minute, he suggests.

Why are people worried about shortages?

Talk about oil leaks: Leaked internal correspondence from automotive companies to their managers suggest that a supply crunch looms.

Costa Kapothanasis, CEO of Costa Oil, a chain of oil-change shops, posted on X last week that Toyota had sent a memo to its dealers with guidance for its service departments. It detailed how to partially substitute types of oil for two particular formulations used in newer Toyota hybrids and cars, including popular models like the Camry and the Corolla.

Toyota did not respond to Money’s request for comment, although automotive blog The Drive noted on Wednesday that the bulletin appears to be authentic. On Thursday, The Drive reported that Nissan had developed a similar notice for its dealership service departments. The automaker confirmed the authenticity of the notice but said it had not yet been distributed to its dealer network.

Still, the picture these messages paint is sobering. Dealerships could have to contend with having their allocations of oil slashed by 45% from a year ago, and the bulletin referenced an unspecified “supplier-driven price adjustment… expected in the near term.”

What's causing the problem?

To understand what’s going on, it helps to know a little bit about this usually unremarkable part of the oil industry: Despite the term, synthetic motor oil — which is recommended, if not required, for most new cars today — still comes from petroleum. Up to 98% of each quart consists of a partially refined feedstock called Group III base oil.

And right now, Group III base oil is almost impossible to get, a supply-chain casualty of the Iran war. About 44% of the U.S. supply comes from the Middle East. The effective closure of the Strait of Hormuz has blocked that supply. Making matters worse, a Qatari facility that makes a large amount of the base oil was severely damaged in March. According to the Independent Lubricant Manufacturers Association, or ILMA, the U.S. will entirely run out of Middle Eastern Group III oil by next month.

The primary “safety valve” for Group III supplies is South Korean refiners. But they source their crude oil via the Strait of Hormuz, too, turning that option into a virtual dead end. And the remaining refineries that could produce it also make diesel and jet fuel — products that are a higher priority for both producers and buyers right now.

This means shoppers might start seeing emptier shelves at stores that sell motor oil soon, Kapothanasis suggested in a separate tweet last week. "Just got word Mobil and Shell have informed Costco and Walmart they have no packaged product to send them and to expect bare shelves in the motor oil section in a few weeks," he wrote.

In an article published Friday, the blog Carscoops reported on a leaked memo allegedly sent by AutoZone to store managers in the Southeast. The notice warned that an “impending supply shortage” could lead to the availability of motor oil and other automotive fluids shrinking by as much as 40%.

The message was blunt, saying, "We're facing the largest supply shortage of lubricating fluids in the modern history of America." It goes on to warn, "Some specific products... will become entirely unavailable."

Money reached out to Costco, Walmart, Advance Auto Parts, AutoZone, NAPA, Jiffy Lube and Valvoline. None provided comment. For now, supplies seem to be holding, although some social media users reported scattered instances of empty shelves or out-of-stock notices online when they tried to buy oil.

What do drivers need to know?

First, the good news: "People will be able to get engine oil. It just might not be exactly what they would want to use [or] what they would usually use,” says Caitlin Jacobs, director of communications for ILMA.

Auto manufacturers generally have their own name-brand motor oil blends that contain proprietary mixtures of additives, but Jacobs predicts that carmakers will provide dealership service departments with guidance about substitutions, so drivers don't need to worry about damaging their engines or voiding their warranties if they have to switch to a different oil.

“It's far better to have something that might be slightly different than to not change your oil," she advises.

But you might find yourself digging deeper into your wallet. “It's going to be more expensive, most likely," De Haan says. The AutoZone memo also warned store managers, "Costs will rise, often dramatically," and outside suppliers' usual schedule for price adjustments.

How much more you'll pay depends on variables like what specific formulation your owner's manual calls for. There has already been an unprecedented wave of price increases in the wholesale market, though, with some product costs rising up to 30% in a matter of weeks.

How long this motor-oil scarcity and resulting inflation will remain an issue depends on how long the Strait of Hormuz remains shut to freighter traffic, but extensive damage to a major Group III production facility in Qatar means that even a best-case scenario calls for months of disruption.

"From our perspective, we don't expect the base oil market conditions to come back to normal until at least the middle of next year," Jacobs says, and it could be longer before a rebound in supply makes its way to service centers and store shelves, she adds. "At this point, we’re looking at a good year or more."