Costco is rationing its Kirkland Signature brand motor oil due to a global shortage of a crucial ingredient used in synthetic lubricants, leading to significant price increases. Members are now limited to purchasing two units of motor oil every seven days.
A 10-quart pack of Kirkland Signature 0W-20 and 5W-20 full synthetic motor oil, which previously sold for approximately $30, is now listed on Costco's website for $57.99. This near doubling of the price reflects broader market pressures affecting lubricant supplies.
The shortage is primarily affecting Group III base oil, a highly refined petroleum product essential for producing full-synthetic and low-viscosity motor oils. According to Andrew Lipow, president of Lipow Oil Associates, key global suppliers of Group III base oils include Qatar, the United Arab Emirates, and South Korea.
The Independent Lubricant Manufacturers Association (ILMA) reports that approximately 44% of normal U.S. demand for Group III base oil was historically supplied from the Persian Gulf. However, disruptions caused by conflicts in the Middle East have impacted major producers in Qatar, Bahrain, and the UAE. A significant blow came from damage to Shell's Pearl gas-to-liquids facility in Qatar, a facility that supplied around 30,000 barrels per day, with repairs expected to take at least a year.
These production challenges have persisted despite improvements in shipping conditions, as damaged capacity and depleted inventories cannot be rapidly replenished. This has forced lubricant blenders to seek Group III supplies from alternative regions, including South Korea.
The scarcity of base oils has contributed to a general increase in fuel prices. Data from the U.S. Energy Information Administration (EIA) indicated regular gasoline at $4.16 per gallon and on-highway diesel at a record $5.97 per gallon, with some reports showing diesel prices exceeding $6 per gallon. Crude oil prices have also surpassed $100 per barrel, further pressuring motor oil manufacturers already contending with the base oil shortage. This situation incentivizes refiners to prioritize higher-margin products like gasoline, diesel, and jet fuel over base oils.
The producer price index for finished lubricants saw a substantial increase of about 15.8% between March and August. An industry survey also found that retail prices for motor oil products rose by 24.2% from February to August. Valvoline has indicated that rising lubricant costs are adding between $5 and $7 to the price of an oil change. ILMA has cautioned that the U.S. base oil market may remain under pressure into 2027, when new domestic Group III capacity is anticipated to come online. Costco has been contacted for comment.