Costco has begun rationing its Kirkland Signature motor oil, limiting customers to two 10-quart packs every seven days, and has raised the price of this product from approximately $30 to $57.99. Similarly, purchases of Mobil 1 motor oil are capped at five six-quart cases per member, with each case costing $44. This unusual step for Costco signals concerns about future stock availability and the potential for further price increases.
The primary cause of this shortage is a significant squeeze in the supply of Group III base oils, a key ingredient making up 80-90% of synthetic motor oil. According to Holly Alfano, CEO of the Independent Lubricant Manufacturers Association (ILMA), the price of Group III base oils has surged by 235% since the war in the Middle East began. This is largely due to 40% of the U.S. supply of Group III base oils coming from the Middle East, where production facilities have sustained damage, and another 30% from South Korea, which relies on Middle Eastern crude oil.
Further exacerbating the situation are increased crude oil prices, which have climbed back above $100 a barrel. This incentivizes refiners to prioritize higher-margin products like gasoline, diesel, and jet fuel over base oils. The closure of the Strait of Hormuz has also led to higher shipping costs and extended delivery times. ILMA anticipates that the market will not normalize until the end of next year at the earliest, as it will take time to rebuild damaged production facilities and bring new U.S. production online.
For consumers, this means higher prices and potentially fewer low-cost options for motor oil. While motor oil is unlikely to disappear entirely, certain synthetic products may become harder to find. Costco's previous pricing made its Kirkland brand a cost-effective choice for drivers who perform their own oil changes, but the new price makes it comparable to branded products sold elsewhere. Other retailers like Walmart and AutoZone offer similar products, with Walmart selling a two-pack of equivalent-name-brand synthetic oil for nearly $64 and AutoZone offering a two-pack of Mobil 1 for $40.99.
