Japanese lubricant manufacturers continue to limit supply while the country develops alternatives to crude oil stranded in the Persian Gulf, according to the July Engine Oil Crisis 2026 report by Plastic Pallet Co., Ltd., a logistics company that provides market updates for customers.
The report said disruptions to API Group I base oil supplies have caused a severe shortage of Japanese Automobile Standards Organization (JASO) DH-2 engine oils used in industrial equipment, heavy-duty trucks and construction machinery. Because DH-2 oils are produced almost exclusively in Japan, imports offer few alternatives.
Although small volumes of Korean products meeting DH-2 specifications may have entered the market, their performance remains uncertain, the report said. As a result, demand for Group III-based lubricants is increasing as substitutes for Group II products.
Among major suppliers, Eneos continues to suspend shipments of products including Super Highland 32 and 46 hydraulic oils and DH-2 CF-4 diesel engine oils in SAE 10W-30 and 15W-40 grades. Idemitsu Kosan resumed accepting orders for some lubricant products on June 29.
Qatar Shell continues to suspend supplies of gas-to-liquids-based lubricants after Iranian attacks on its plant and expects production to resume in about a year. Cosmo Oil continues to suspend orders for all lubricants except engine and transmission oils, leaving many products out of stock. Castrol raised prices on products shipped from May 1 and continues to restrict orders to customers with an established shipment history.
The report said the disruption could accelerate Japan’s shift away from Middle Eastern crude by encouraging greater use of bio-based and synthetic lubricants. It added that businesses should adjust inventory, pricing and contract terms to reflect a “new normal” rather than expect a return to previous market conditions.
It also said the government’s 3.1 trillion yen (U.S.$19 billion) supplementary budget announced in May demonstrates its commitment to supporting the transition over the next 12 to 18 months.
Japan imports more than 90% of its crude oil from the Middle East. According to documents from the 10th Ministerial Meeting on the Middle East Situation, held in June, procurement of crude from alternative sources that bypass the Strait of Hormuz has accelerated.
Alternative procurement reached about 25% of year-earlier levels in April, 65% in May and 80% in June. For July, daily demand is projected at 2.24 million barrels while procurement is expected to exceed 2.4 million barrels per day, more than 100% of year-earlier levels.
The government expects to secure more than 10 times the average monthly volume imported from the United States last year and more than three times the volume procured in May. The report said continued growth in alternative supplies would help stabilize Japan’s oil supply through the end of the next fiscal year.