The market is in an exceptional situation.
What has been unfolding in the global supply chain since the start of 2026 surpasses anything the industry has experienced in years: it is not one link in the chain that is affected, but all of them at once. It is precisely in times like these that we believe transparency and explanation are worth more than a brief notification.
This article explains why. From cost structure to geopolitics, from crude oil to the bottle. We aim to provide relevant information to support our customers’ independent decision-making in a rapidly evolving market environment.
A lubricant seems like a simple product. It is not. Every drum, every bucket or bottle is the result of a complex global supply chain with four cost components and all four are currently under pressure at the same time.
Base oils represent the dominant share of the cost price and are the backbone of every lubricant. Refineries produce what is profitable: at current crude oil prices, petrol and diesel yield margins many times higher than base oil, which itself accounts for only a marginal fraction of a barrel of crude. The consequence is unavoidable — base oil production contracts while demand remains the same. Combined with the significant loss of global Group III base oil capacity due to infrastructure damage in the Middle East, high-quality synthetic base oil is currently virtually unobtainable.
Additives, which make up a substantial share of cost price, come from highly specialised chemical supply chains with a limited number of global suppliers. Chemical raw material inflation and rising energy costs are pushing prices up considerably. Packaging -bottles, caps, buckets and drums, is strongly determined by HDPE plastic, the European prices of which have risen sharply compared to early 2026. Transport and energy costs have also increased significantly, driven by higher fuel costs, longer routes and rising maritime insurance premiums.
The conclusion is clear: those who only look at the base oil price underestimate the real pressure in the market. All components are moving in the same direction simultaneously, substituting base oil alone is therefore not a solution.
The current situation is the result of three simultaneous developments. None of them alone would cause a crisis. Together, they form a perfect storm.
1. The Persian Gulf and the Strait of Hormuz
At the end of February 2026, the conflict in the Middle East escalated dramatically. The Strait of Hormuz, through which a large portion of the world's oil and gas flows pass, was severely disrupted. Maritime traffic fell by 90%. More than 2,000 ships are blocked in the Persian Gulf and 20,000 seafarers are stranded in the danger zone. This has direct consequences for both the supply of crude oil and the export of base oils from the region.
2. Large-scale production shutdown in the Gulf region
In addition to the disrupted shipping, three crucial Group III base oil production facilities in the Gulf were severely damaged, in Bahrain, the United Arab Emirates and Qatar. Together they represent approximately 70% of Middle East Group III capacity and around 30% of global production. The damage is substantial: the recovery of the largest installation is not expected until well into 2027. Even when the conflict comes to an end, production capacity will not return overnight.
3. Crude oil prices and refinery economics
The Brent crude price rose from approximately $65 per barrel at the start of 2026 to a peak above $120, and is currently trading around $94-$100. At this price level, margins on diesel and kerosene are five times higher than on base oil. Refineries automatically direct their production towards the most profitable products and base oil loses that competition. Supply therefore contracts further, regardless of brand or supplier.
The honest answer is: not soon. Base oil indices rise quickly and fall slowly, historically they move on average twice as fast during rising months as during falling months. Even in the event of a relatively swift end to the conflict, the following recovery timelines are expected:
9 to 12 months for recovery of supply chains across the full value chain, following the reopening of shipping routes.
2 to 3 years for the reconstruction and diversification of Group III production capacity in the region.
2 to 3 years before prices return to pre-conflict levels.
The longer the conflict continues, the further feedstock inventories deplete and the more production capacity elsewhere decreases, further delaying recovery. The market needs time, and that is a reality we do not want to keep from you.
The causes are beyond our control. How we respond is not. We are doing everything in our power to keep your deliveries as secure and predictable as possible, even in a market that is anything but.
Strategic inventory management: We anticipate shortages by purchasing in a timely and considered manner, so that available volumes are secured for you as effectively as possible.
Fair allocation: In situations of constrained supply, available volumes are allocated based on objective and operational criteria, taking into account factors such as contractual commitments and continuity of supply.
Active search for alternatives: Where a product is temporarily unavailable, we look for technically equivalent solutions with OEM approvals and standards always verified in advance.
Transparent communication: You always know where you stand. We proactively inform you of any changes in availability or pricing in advance, not after the fact.
In this market, it is not about ordering more, it is about being able to continue to rely on delivery. Supply security takes priority over price optimisation.
Market sources: ICIS Base Oils Europe (weekly assessments Oct 2025–Apr 2026) · Argus Base Oils April 2026 · The Oil Market Journal · Eurostat road transport index · US Department of Energy · UN News / IMO Mar–Apr 2026 · Lubes'N'Greases / ICIS installation data