Global Base Oil Shortage Impacts Luxury Car Market
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy SHEL?
Source: CNBC
- Base Oil Supply Crisis: The ongoing Iran war has triggered a global base oil shortage that is beginning to affect luxury car drivers, with stocks expected to run dry within a month if the situation does not improve, thereby limiting finished lubricant production and impacting luxury vehicle usage.
- Price Surge: Reports indicate that Group III base oil prices in Northern Europe have soared nearly 100% since the onset of the Iran war, which will directly increase the cost of finished lubricants, ultimately passed on to consumers and exacerbating market pressures.
- Supply Chain Risks: Due to shipping disruptions in the Strait of Hormuz and export restrictions imposed by South Korea, the U.S. base oil market is expected to remain under sustained pressure, with ILMA forecasting high costs and supply tightness until at least 2027, affecting multiple sectors.
- Climate Risk Intensification: With hurricane season approaching, any storm could potentially damage 30%-40% of U.S. Group II capacity along the Gulf Coast, further tightening an already strained supply chain and placing additional pressure on the lubricant industry.
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Analyst Views on SHEL
Wall Street analysts forecast SHEL stock price to fall
10 Analyst Rating
5 Buy
5 Hold
0 Sell
Moderate Buy
Current: 88.910
Low
41.75
Averages
74.27
High
91.00
Current: 88.910
Low
41.75
Averages
74.27
High
91.00
About SHEL
Shell plc is an international energy company engaged in the principal aspects of the energy and petrochemical industries. The Company's segments include Integrated Gas, Upstream, Marketing, Chemicals and Products, Renewables and Energy Solutions, and Corporate. The Integrated Gas segment includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products. It includes natural gas and liquids exploration and extraction, and the operation of the upstream and midstream infrastructure. The Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas and operates the infrastructure necessary to deliver them to the market. The Marketing segment comprises the Mobility, Lubricants, and Sectors & Decarbonization businesses. The Chemicals and Products segment includes chemicals manufacturing plants with their own marketing network, and refineries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
UAE Exits OPEC, Shaking Global Oil Market Dynamics
- UAE Exits OPEC: The UAE's announcement to leave OPEC on May 1st, despite being the third-largest producer, could lead to a significant drop in OPEC's global market share below 30% for the first time, impacting oil price stability.
- Production Potential Unleashed: The UAE has the capacity to increase its oil production from 3.3 million barrels per day to over 4 million, and potentially 5 million, indicating a desire to break free from OPEC's production constraints and enhance market competitiveness.
- OPEC Market Share Shift: Following the UAE's exit, OPEC will control approximately 28% of the global market, with the OPEC+ alliance adding another 14%, resulting in non-OPEC countries and the U.S. controlling 58% of the market, thus reshaping the global oil landscape.
- Future Price Expectations: Analysts from Morgan Stanley and Goldman Sachs have raised their oil price forecasts, anticipating Brent crude could rise to $90 by 2026 due to reduced output from the Middle East, highlighting the market's sensitivity to oil price fluctuations.
See More
Strait of Hormuz Shutdown Causes Oil and Gas Shortages
- Crude Oil Shortage Impact: Shell CEO Wael Sawan stated that the shutdown of the Strait of Hormuz has resulted in approximately 900 million barrels of crude oil not produced over the past few months, with expectations that this shortage will persist for months and possibly into next year, leading to tight global oil and gas supplies.
- Tight Supply Outlook: Sawan noted that many regions are facing relatively low levels of oil and gas supply, with increasing discussions around demand curtailment and fuel switching, indicating that supply-demand balances are likely to remain tight for the coming months, if not over a year.
- ARC Resources Acquisition: Earlier this week, Shell agreed to acquire Canadian shale producer ARC Resources for $13.6 billion; while this acquisition provides diversification away from the Middle East, Sawan emphasized that it was not the key driver of the deal, as Shell had been assessing ARC for two years prior to the war.
- Diversification Strategy: Sawan mentioned that Shell's focus is on diversifying production while also looking at new horizons, acknowledging that the restructuring process may take several years, but the company remains committed to addressing current market challenges.
See More
Global Base Oil Shortage Impacts Luxury Car Market
- Base Oil Supply Crisis: The ongoing Iran war has triggered a global base oil shortage that is beginning to affect luxury car drivers, with stocks expected to run dry within a month if the situation does not improve, thereby limiting finished lubricant production and impacting luxury vehicle usage.
- Price Surge: Reports indicate that Group III base oil prices in Northern Europe have soared nearly 100% since the onset of the Iran war, which will directly increase the cost of finished lubricants, ultimately passed on to consumers and exacerbating market pressures.
- Supply Chain Risks: Due to shipping disruptions in the Strait of Hormuz and export restrictions imposed by South Korea, the U.S. base oil market is expected to remain under sustained pressure, with ILMA forecasting high costs and supply tightness until at least 2027, affecting multiple sectors.
- Climate Risk Intensification: With hurricane season approaching, any storm could potentially damage 30%-40% of U.S. Group II capacity along the Gulf Coast, further tightening an already strained supply chain and placing additional pressure on the lubricant industry.
See More
Shell plc Capital Disclosure Announcement
- Total Capital: As of April 30, 2026, Shell plc's capital comprises 5,607,066,071 ordinary shares with a nominal value of €0.07 each, indicating the company's stable capital structure.
- Transparency Compliance: This announcement adheres to the FCA's Disclosure Guidance and Transparency Rules, ensuring shareholders can accurately calculate their interest in Shell, thereby enhancing market transparency.
- Buyback Program Impact: The figure includes shares purchased as part of Shell's buyback program that have not yet been canceled, reflecting the company's proactive capital management strategy, which may influence future shareholder equity.
- Shareholder Notification Requirements: Shareholders can use this figure as a denominator to determine if they need to notify changes in their interest in Shell, ensuring compliance and maintaining market order.
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- Shell's Strategic Shift: The sale will allow Shell to divest a portion of its 40% stake in LNG Canada while funding its $16.4 billion acquisition of Canadian natural gas producer ARC Resources, thereby optimizing its asset portfolio.
- Significant Market Potential: The LNG Canada project, which began production in June, is the first major liquefied natural gas facility in North America with direct access to the Pacific, enabling direct shipments to Asia, the largest market for super-cooled fuel, and is expected to attract more investor attention.
- Clear Transaction Structure: Shell plans to sell both the first and second phases of the project to a single bidder rather than splitting them, a strategy that will help streamline the transaction process and enhance buyer confidence.
See More
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Market Implications: This acquisition reflects ongoing interest and investment in the liquefied natural gas sector.
See More
UAE Exits OPEC, Shaking Global Oil Market Dynamics
- UAE Exits OPEC: The UAE's announcement to leave OPEC on May 1st, despite being the third-largest producer, could lead to a significant drop in OPEC's global market share below 30% for the first time, impacting oil price stability.
- Production Potential Unleashed: The UAE has the capacity to increase its oil production from 3.3 million barrels per day to over 4 million, and potentially 5 million, indicating a desire to break free from OPEC's production constraints and enhance market competitiveness.
- OPEC Market Share Shift: Following the UAE's exit, OPEC will control approximately 28% of the global market, with the OPEC+ alliance adding another 14%, resulting in non-OPEC countries and the U.S. controlling 58% of the market, thus reshaping the global oil landscape.
- Future Price Expectations: Analysts from Morgan Stanley and Goldman Sachs have raised their oil price forecasts, anticipating Brent crude could rise to $90 by 2026 due to reduced output from the Middle East, highlighting the market's sensitivity to oil price fluctuations.
See More
Strait of Hormuz Shutdown Causes Oil and Gas Shortages
- Crude Oil Shortage Impact: Shell CEO Wael Sawan stated that the shutdown of the Strait of Hormuz has resulted in approximately 900 million barrels of crude oil not produced over the past few months, with expectations that this shortage will persist for months and possibly into next year, leading to tight global oil and gas supplies.
- Tight Supply Outlook: Sawan noted that many regions are facing relatively low levels of oil and gas supply, with increasing discussions around demand curtailment and fuel switching, indicating that supply-demand balances are likely to remain tight for the coming months, if not over a year.
- ARC Resources Acquisition: Earlier this week, Shell agreed to acquire Canadian shale producer ARC Resources for $13.6 billion; while this acquisition provides diversification away from the Middle East, Sawan emphasized that it was not the key driver of the deal, as Shell had been assessing ARC for two years prior to the war.
- Diversification Strategy: Sawan mentioned that Shell's focus is on diversifying production while also looking at new horizons, acknowledging that the restructuring process may take several years, but the company remains committed to addressing current market challenges.
See More
Global Base Oil Shortage Impacts Luxury Car Market
- Base Oil Supply Crisis: The ongoing Iran war has triggered a global base oil shortage that is beginning to affect luxury car drivers, with stocks expected to run dry within a month if the situation does not improve, thereby limiting finished lubricant production and impacting luxury vehicle usage.
- Price Surge: Reports indicate that Group III base oil prices in Northern Europe have soared nearly 100% since the onset of the Iran war, which will directly increase the cost of finished lubricants, ultimately passed on to consumers and exacerbating market pressures.
- Supply Chain Risks: Due to shipping disruptions in the Strait of Hormuz and export restrictions imposed by South Korea, the U.S. base oil market is expected to remain under sustained pressure, with ILMA forecasting high costs and supply tightness until at least 2027, affecting multiple sectors.
- Climate Risk Intensification: With hurricane season approaching, any storm could potentially damage 30%-40% of U.S. Group II capacity along the Gulf Coast, further tightening an already strained supply chain and placing additional pressure on the lubricant industry.
See More
Shell plc Capital Disclosure Announcement
- Total Capital: As of April 30, 2026, Shell plc's capital comprises 5,607,066,071 ordinary shares with a nominal value of €0.07 each, indicating the company's stable capital structure.
- Transparency Compliance: This announcement adheres to the FCA's Disclosure Guidance and Transparency Rules, ensuring shareholders can accurately calculate their interest in Shell, thereby enhancing market transparency.
- Buyback Program Impact: The figure includes shares purchased as part of Shell's buyback program that have not yet been canceled, reflecting the company's proactive capital management strategy, which may influence future shareholder equity.
- Shareholder Notification Requirements: Shareholders can use this figure as a denominator to determine if they need to notify changes in their interest in Shell, ensuring compliance and maintaining market order.
See More
Shell Sells Stake in LNG Canada Project Amid Bidding War
- Bidding War Intensifies: Apollo Global Management, Blackstone, and KKR are competing to acquire a significant stake in Shell's LNG Canada project, with the deal expected to be valued well over $10 billion, potentially reaching $15 billion, indicating strong market interest in LNG projects.
- Shell's Strategic Shift: The sale will allow Shell to divest a portion of its 40% stake in LNG Canada while funding its $16.4 billion acquisition of Canadian natural gas producer ARC Resources, thereby optimizing its asset portfolio.
- Significant Market Potential: The LNG Canada project, which began production in June, is the first major liquefied natural gas facility in North America with direct access to the Pacific, enabling direct shipments to Asia, the largest market for super-cooled fuel, and is expected to attract more investor attention.
- Clear Transaction Structure: Shell plans to sell both the first and second phases of the project to a single bidder rather than splitting them, a strategy that will help streamline the transaction process and enhance buyer confidence.
See More
EXCLUSIVE: APOLLO, BLACKSTONE, AND KKR EMERGE AS FINAL CONTENDERS TO PURCHASE SHELL'S STAKE IN LNG CANADA, SOURCES REVEAL
Acquisition Details: Blackstone and KKR are final bidders in a race to acquire a stake in LNG Canada from Shell.
Market Implications: This acquisition reflects ongoing interest and investment in the liquefied natural gas sector.
See More
