Matt McGinnis, Kem Krest Chief Commercial Officer
July 23, 2026
Executive Summary
The automotive lubricants market is facing a new reality. While crude oil prices often dominate the conversation, lubricant availability is increasingly influenced by a broader mix of geopolitical conflict, maritime security threats, refinery disruptions, trade restrictions, and shifting global supply chains. These factors are creating a growing accumulation of risk across the lubricant value chain.
In this article, Kem Krest Chief Commercial Officer Matthew McGinnis explores how ongoing challenges—including instability affecting key global shipping routes and continued disruption to global petroleum markets—are impacting the movement of base oils, additives, and other critical lubricant components. As modern lubricant formulations rely on a limited number of qualified raw material sources, even relatively minor disruptions can have significant downstream effects.
For OEMs and supply chain leaders, the takeaway is clear: understanding supply chain vulnerabilities is just as important as monitoring commodity prices. Organizations that proactively evaluate supplier diversification and secondary sourcing strategies will be better positioned to maintain continuity, reduce risk, and navigate an increasingly complex lubricant supply environment.
Introduction
The automotive lubricants industry has always been influenced by crude oil prices, refinery economics, and vehicle technology. But today’s market is being shaped by a much broader and more complicated set of forces.
Geopolitical conflict, maritime security threats, refinery disruptions, evolving vehicle specifications, sanctions, and shifting global trade flows are all colliding at the same time. The result is not a traditional supply crisis, but something more complex: a steady accumulation of risk across the entire lubricant value chain.
While headlines often focus on crude oil prices, the lubricant industry should be paying close attention to the underlying supply chain for base oils, additives, and freight capacity. As modern vehicles evolve and demand higher performance, lubricant formulations have evolved with it. These new formulations use a very select pool of lubricant additives paired with the highest standards for base oil purity. As a result, the number of available sources for these materials is rather limited. So when even a minor supply disruption happens, it can have an outsized impact on the availability of motor oil for today’s vehicles.
A Conflict No Longer Limited to the Persian Gulf
For much of the recent Middle East conflict, the primary concern for energy markets was the potential disruption of crude oil and condensate flows through the Strait of Hormuz. That remains a major concern because Hormuz is one of the world’s most important oil transit routes. However, the risk has now expanded beyond the Persian Gulf.
Recent attacks by Houthi rebels on oil tankers in the Red Sea and threats to maritime traffic through the Bab el-Mandeb Strait have effectively created a second major chokepoint. The Bab el-Mandeb connects the Indian Ocean with the Red Sea and the Suez Canal, making it a critical corridor for energy and commercial shipping between Asia, the Middle East, Europe, and North America. And while many types of cargo ships use this corridor, it looks like the Houthis are focusing their limited resources to specifically target oil tankers attempting to transit the Bab el-Mandeb Strait.
The Russia-Ukraine War Continues to Reshape Global Lubricant Supply
While recent attention has focused on the Middle East, the Russia-Ukraine war remains one of the most important structural forces affecting global petroleum and lubricant markets.
Ukraine has significantly expanded its domestic drone manufacturing and long-range strike capabilities, allowing it to conduct increasingly frequent attacks against Russian refineries, oil depots, export terminals, and energy infrastructure. These strikes have targeted facilities deep inside Russia, including major refining assets and oil export infrastructure.
The impact is not simply symbolic. Ukrainian drone attacks have periodically removed meaningful amounts of Russian refining capacity from service, contributed to domestic fuel shortages, increased fuel prices inside Russia, and created uncertainty around Russia’s ability to maintain normal refining and petroleum product distribution. You’ve probably heard of these strikes for months now. The significance is that the frequency of these attacks has been rapidly escalating over the past couple months.
For the lubricant industry, the key point is not that Russian oil exports have stopped entirely. Ukrainian attacks have materially increased uncertainty surrounding Russian petroleum production, refining reliability, product flows, and export logistics. Some attacks have also temporarily disrupted export activity through strategic facilities such as Baltic ports. The market does not require a complete shutdown of Russian exports to feel the impact. Repeated refinery outages, damaged storage assets, constrained product flows, and increased domestic Russian fuel demand all reduce flexibility in the broader global petroleum system.
Why Lubricants Are Different Than Fuels
Gasoline and diesel markets tend to receive the most public attention because consumers feel price changes immediately at the pump. Lubricants, however, operate through a more specialized and technically complex supply chain.
A typical passenger car motor oil may rely on:
- Base oils produced in one region
- Additive components manufactured in another
- Blending and packaging in a third location
- Distribution through OEM, retail, installer, or industrial channels
That complexity creates vulnerability. When shipping routes are disrupted, the first impact is not always a product shortage. More often, the first signs are higher freight rates, higher marine insurance premiums, longer transit times, vessel rerouting, and increased working capital requirements.
For lubricant manufacturers and distributors, that can mean margin compression well before customers see empty shelves.
Group III Base Oils Remain the Biggest Watch Item
Among all lubricant feedstocks, Group III base oils deserve the closest attention. Posted prices of Group III base oils have more than doubled since February and continue to rise.
Modern engine oils increasingly require higher-quality base stocks like Group III base oils to support lower viscosity formulations, improved fuel economy, longer drain intervals, turbocharger protection, and compatibility with modern emissions systems. Many OEM-approved products, including 0W-20, 0W-16, 0W-8, dexos-approved oils, and certain European specifications, rely heavily on premium Group II+, Group III, and synthetic base stock technologies.
A significant portion of the global Group III supply base is tied to production and logistics networks in the Middle East (44%) and Asia (25%). That makes Group III availability particularly sensitive to disruptions affecting Hormuz, the Red Sea, Bab el-Mandeb, and Suez-linked trade flows.
If disruption persists, synthetic and synthetic-blend motor oils are likely to feel cost pressure earlier than conventional formulations.
The New Competitive Advantage: Supply Chain Resilience
The automotive lubricants market is entering an era where supply chain resilience may be just as important as formulation expertise.
Companies that succeed in this environment will likely have:
- Diversified base oil sourcing
- Strong supplier relationships
- Multiple logistics options
- Better inventory visibility
- Clear allocation strategies
- Regional redundancy
- Stronger risk monitoring capabilities
The industry is no longer managing a single risk factor. It is managing a network of overlapping risks across production, transportation, refining, trade policy, and geopolitical security.
Final Thoughts
The automotive lubricants market is not experiencing a traditional supply crisis. Instead, it is entering a period of heightened geopolitical exposure where multiple producing regions and transportation corridors face disruption risk at the same time. Major automotive companies with aftersales portfolios supporting their vehicles have the most to lose from having a disruption in their genuine fluid programs. The inability for dealers to procure genuine fluids from their affiliated OEM partners can result in delayed service, lost service sales, or improper fluid use which could put the reliability of the vehicle at risk. Fortunately, OEMs can leverage supply management companies (like Kem Krest) to manage this complexity and provide contingency plans when these issues arise.
Matt McGinnis, Kem Krest Chief Commercial Officer
July 23, 2026
Executive Summary
The automotive lubricants market is facing a new reality. While crude oil prices often dominate the conversation, lubricant availability is increasingly influenced by a broader mix of geopolitical conflict, maritime security threats, refinery disruptions, trade restrictions, and shifting global supply chains. These factors are creating a growing accumulation of risk across the lubricant value chain.
In this article, Kem Krest Chief Commercial Officer Matthew McGinnis explores how ongoing challenges—including instability affecting key global shipping routes and continued disruption to global petroleum markets—are impacting the movement of base oils, additives, and other critical lubricant components. As modern lubricant formulations rely on a limited number of qualified raw material sources, even relatively minor disruptions can have significant downstream effects.
For OEMs and supply chain leaders, the takeaway is clear: understanding supply chain vulnerabilities is just as important as monitoring commodity prices. Organizations that proactively evaluate supplier diversification and secondary sourcing strategies will be better positioned to maintain continuity, reduce risk, and navigate an increasingly complex lubricant supply environment.
Introduction
The automotive lubricants industry has always been influenced by crude oil prices, refinery economics, and vehicle technology. But today’s market is being shaped by a much broader and more complicated set of forces.
Geopolitical conflict, maritime security threats, refinery disruptions, evolving vehicle specifications, sanctions, and shifting global trade flows are all colliding at the same time. The result is not a traditional supply crisis, but something more complex: a steady accumulation of risk across the entire lubricant value chain.
While headlines often focus on crude oil prices, the lubricant industry should be paying close attention to the underlying supply chain for base oils, additives, and freight capacity. As modern vehicles evolve and demand higher performance, lubricant formulations have evolved with it. These new formulations use a very select pool of lubricant additives paired with the highest standards for base oil purity. As a result, the number of available sources for these materials is rather limited. So when even a minor supply disruption happens, it can have an outsized impact on the availability of motor oil for today’s vehicles.
A Conflict No Longer Limited to the Persian Gulf
For much of the recent Middle East conflict, the primary concern for energy markets was the potential disruption of crude oil and condensate flows through the Strait of Hormuz. That remains a major concern because Hormuz is one of the world’s most important oil transit routes. However, the risk has now expanded beyond the Persian Gulf.
Recent attacks by Houthi rebels on oil tankers in the Red Sea and threats to maritime traffic through the Bab el-Mandeb Strait have effectively created a second major chokepoint. The Bab el-Mandeb connects the Indian Ocean with the Red Sea and the Suez Canal, making it a critical corridor for energy and commercial shipping between Asia, the Middle East, Europe, and North America. And while many types of cargo ships use this corridor, it looks like the Houthis are focusing their limited resources to specifically target oil tankers attempting to transit the Bab el-Mandeb Strait.
The Russia-Ukraine War Continues to Reshape Global Lubricant Supply
While recent attention has focused on the Middle East, the Russia-Ukraine war remains one of the most important structural forces affecting global petroleum and lubricant markets.
Ukraine has significantly expanded its domestic drone manufacturing and long-range strike capabilities, allowing it to conduct increasingly frequent attacks against Russian refineries, oil depots, export terminals, and energy infrastructure. These strikes have targeted facilities deep inside Russia, including major refining assets and oil export infrastructure.
The impact is not simply symbolic. Ukrainian drone attacks have periodically removed meaningful amounts of Russian refining capacity from service, contributed to domestic fuel shortages, increased fuel prices inside Russia, and created uncertainty around Russia’s ability to maintain normal refining and petroleum product distribution. You’ve probably heard of these strikes for months now. The significance is that the frequency of these attacks has been rapidly escalating over the past couple months.
For the lubricant industry, the key point is not that Russian oil exports have stopped entirely. Ukrainian attacks have materially increased uncertainty surrounding Russian petroleum production, refining reliability, product flows, and export logistics. Some attacks have also temporarily disrupted export activity through strategic facilities such as Baltic ports. The market does not require a complete shutdown of Russian exports to feel the impact. Repeated refinery outages, damaged storage assets, constrained product flows, and increased domestic Russian fuel demand all reduce flexibility in the broader global petroleum system.
Why Lubricants Are Different Than Fuels
Gasoline and diesel markets tend to receive the most public attention because consumers feel price changes immediately at the pump. Lubricants, however, operate through a more specialized and technically complex supply chain.
A typical passenger car motor oil may rely on:
- Base oils produced in one region
- Additive components manufactured in another
- Blending and packaging in a third location
- Distribution through OEM, retail, installer, or industrial channels
That complexity creates vulnerability. When shipping routes are disrupted, the first impact is not always a product shortage. More often, the first signs are higher freight rates, higher marine insurance premiums, longer transit times, vessel rerouting, and increased working capital requirements.
For lubricant manufacturers and distributors, that can mean margin compression well before customers see empty shelves.
Group III Base Oils Remain the Biggest Watch Item
Among all lubricant feedstocks, Group III base oils deserve the closest attention. Posted prices of Group III base oils have more than doubled since February and continue to rise.
Modern engine oils increasingly require higher-quality base stocks like Group III base oils to support lower viscosity formulations, improved fuel economy, longer drain intervals, turbocharger protection, and compatibility with modern emissions systems. Many OEM-approved products, including 0W-20, 0W-16, 0W-8, dexos-approved oils, and certain European specifications, rely heavily on premium Group II+, Group III, and synthetic base stock technologies.
A significant portion of the global Group III supply base is tied to production and logistics networks in the Middle East (44%) and Asia (25%). That makes Group III availability particularly sensitive to disruptions affecting Hormuz, the Red Sea, Bab el-Mandeb, and Suez-linked trade flows.
If disruption persists, synthetic and synthetic-blend motor oils are likely to feel cost pressure earlier than conventional formulations.
The New Competitive Advantage: Supply Chain Resilience
The automotive lubricants market is entering an era where supply chain resilience may be just as important as formulation expertise.
Companies that succeed in this environment will likely have:
- Diversified base oil sourcing
- Strong supplier relationships
- Multiple logistics options
- Better inventory visibility
- Clear allocation strategies
- Regional redundancy
- Stronger risk monitoring capabilities
The industry is no longer managing a single risk factor. It is managing a network of overlapping risks across production, transportation, refining, trade policy, and geopolitical security.
Final Thoughts
The automotive lubricants market is not experiencing a traditional supply crisis. Instead, it is entering a period of heightened geopolitical exposure where multiple producing regions and transportation corridors face disruption risk at the same time. Major automotive companies with aftersales portfolios supporting their vehicles have the most to lose from having a disruption in their genuine fluid programs. The inability for dealers to procure genuine fluids from their affiliated OEM partners can result in delayed service, lost service sales, or improper fluid use which could put the reliability of the vehicle at risk. Fortunately, OEMs can leverage supply management companies (like Kem Krest) to manage this complexity and provide contingency plans when these issues arise.