The U.S. base oil market absorbed a major supply chain disruption during the first half of 2026 as the conflict with Iran almost halted Middle Eastern shipping through the Strait of Hormuz.
U.S. Energy Information Administration data supplied, a stand-in for domestic consumption, rose 34% year on year in the first six months to 18.9 million barrels. Domestic production increased 3.2% to 28.1 million barrels, helping maintain supply as international trade flows became more constrained.
The market came under increasing pressure as the disruption rippled through the supply chain. Product supplied reached 4.03 million barrels in March, the highest monthly level of the first half, before falling to 2.52 million barrels in May and recovering to 2.78 million barrels in June. Production remained relatively stable, while imports weakened and inventories were drawn down.
First-half 2026 imports fell 5.2% year on year, to 7.3 million barrels. The decline became more pronounced during the second quarter, with imports falling from 1.58 million barrels in March to 1.5 million in April, 601,000 in May and 831,000 in June, a 26.1% decline from Q1 to Q2, 2026. May imports were almost 42% below May 2025 levels.
U.S. lubricant blenders had come to rely heavily on imported Group III material from Middle Eastern producers. By April, Middle Eastern suppliers accounted for just 14% of U.S. Group III imports, compared with more than 45% in 2025, according to Base Oil News. Qatar shipments had paused as the Shell-Qatar Energy gas-to-liquids plant there closed, and imports from ADNOC in the UAE fell to 4,500 barrels.
South Korea was a key alternative source for Group III and other grades. Exports to the U.S. rose to close to 560,000 barrels in March before falling to 114,000 barrels in April, Korea Customs Service data showed. The April drop was due to refinery maintenance. Exports to the U.S. rebounded to about 604,000 barrels in May.
April base oil imports into the U.S. fell to 1.23 million barrels, down 20% year on year, even as a surge in South Korean shipments temporarily masked the near-disappearance of Middle Eastern supply.
The U.S. market also retained more material domestically, as lubricant exports fell 15.1% year on year during H1 to 19.5 million barrels, a reduction of 3.5 million barrels.
Inventories provided another buffer. Lubricant stocks fell from 11.46 million barrels in January to 9 million at the end of June, a drop of 21.5%. Every month of 2026 recorded an inventory draw, with June accounting for a 710,000-barrel loss.