Costco Rations Motor Oil as Hormuz Crisis Deepens Global Base Oil Shortage

Costco Wholesale, the Issaquah, Washington-based warehouse club, has started rationing motor oil as a global shortage of lubricant base stocks reaches American consumers. The retailer now limits its Kirkland Signature full-synthetic motor oil to one transaction per membership and a maximum of two units every seven days. Each unit is a twin pack of two 5-quart bottles, so a member can buy no more than 20 quarts per week.

The price has also risen sharply. The 10-quart case is now listed at $57.99, compared with roughly $30 to $35 for much of the past several years. Branded products are affected too, with Mobil 1 full-synthetic six-packs of 1-quart bottles priced at about $44 and capped at five per membership. For a warehouse chain built on bulk buying, such limits on motor oil are highly unusual. Costco had not commented publicly on the move as of September 14, and it is still unclear how long the restriction will remain in place. Walmart, Amazon and AutoZone did not respond to questions about possible price increases or limits of their own.

Synthetic motor oil is made mostly of base oil, which represents the large majority of the finished product, while additives make up the rest. Modern full-synthetic oils rely heavily on Group III base oils, a highly refined grade produced from crude oil. Base oils come out of the same barrel as gasoline and diesel, and with fuel prices soaring, refiners earn more by turning crude into transportation fuels than into lubricant feedstock. The national average price of diesel passed $6 per gallon on September 11, reaching $6.06 compared with $3.71 a year earlier.

The second pressure is geographic. The United States imports a large share of its Group III base oil from the Persian Gulf. According to the Independent Lubricant Manufacturers Association (ILMA), three Gulf producers in Qatar, the United Arab Emirates and Bahrain normally supply about 44% of US Group III base oil, while South Korean refiners provide around 30%. Since the war between the United States, Israel and Iran began on February 28, shipping through the Strait of Hormuz has been severely disrupted. Iranian missile strikes damaged Shell's Pearl gas-to-liquids plant in Qatar, and producers in Bahrain and the UAE declared force majeure. South Korean refiners, which depend on Middle East crude, have struggled to fill the gap, and Seoul introduced export caps on refined petroleum products to protect its domestic supply. Group II base oil, the usual fallback, is also being pulled toward diesel production.

Warnings about the shortage appeared months before the Costco limits. ILMA asked US authorities for emergency relief in March and later warned of an imminent shortage of low-viscosity grades such as 0W-8, 0W-16 and 0W-20, which many recent engines require. By mid-May, Group III base oil prices had climbed above $10 per gallon, and Middle Eastern Group III exports to world markets fell by more than 70% between March and May.

Automakers were among the first to react. In early May, Nissan issued an allocation notice capping the supply of Genuine Nissan oil to its US dealers at around 55% of the previous year's volumes, and Toyota published a service bulletin authorizing temporary oil grade substitutions for some models. Manufacturers and dealerships then began building larger inventories of motor oil and transmission fluid to protect vehicle production and servicing.

Diplomacy has so far failed to bring relief. A ceasefire announced in early April quickly faltered, and the US imposed a naval blockade on Iranian ports on April 13. A memorandum signed in Islamabad on June 17 set a 60-day window for a permanent deal and committed Iran to let commercial vessels through the strait, but the two sides exchanged strikes in late June and President Trump declared the ceasefire over on July 8. By July, US Gulf Coast Group III transaction prices were about $8 per gallon above pre-war levels, an increase of more than 230% for the most common grade, and lubricant blenders were passing those costs down the supply chain.

Crude prices have rallied again in recent weeks. Brent, which traded below $72 in early July, rose above $108 a barrel on September 14, its highest level in four months. Drone attacks on September 10 and 11 forced Saudi Arabia to shut its East-West pipeline, a route with a capacity of about 7 million barrels per day that allows Saudi crude to bypass Hormuz. A meeting between Gulf Cooperation Council states and Iran on managing shipping through the strait, planned for September 14 in Salalah, Oman, was postponed late on September 13 with no new date announced.

For drivers, the price jump erodes the savings that made do-it-yourself oil changes attractive. A full-synthetic oil change built around a Kirkland twin pack and a filter now costs close to what many independent shops charge for the same service. Kirkland's 5W-30 carries General Motors' dexos1 Gen 3 approval, and meeting such automaker standards involves testing and licensing costs that limit how quickly blenders can switch to other base stocks.

The outlook remains tight. Industry analysts cited by ILMA do not expect Group III supply to fully normalize before mid-2027, and the US Energy Information Administration does not see Middle East oil output returning close to pre-war levels until early 2027. Until traffic through Hormuz recovers and damaged Gulf plants return to service, further price increases and purchase limits at other US retailers remain possible. Drivers are advised not to postpone scheduled oil changes and to use substitute grades only when the vehicle manufacturer explicitly authorizes them.