The disruption in the Persian Gulf is no longer a temporary freight problem. It has become a broader supply, logistics and confidence shock for the Asian base-stock market. The most serious pressure is on Group III, where the Middle East remains strategically important to global supply. New capacity is coming across Asia and the Middle East, but the market may not feel the full benefit as quickly as the headline numbers suggest.
Infineum’s 29 September 2026 Insight, drawing on analysis presented by ICIS at the 18th ICIS Asian Base Oils and Lubricants Conference, describes a recovery path that has become slower and more uneven. Asian demand remains growth-oriented, supported by industrial activity, expansion of the vehicle parc and continuing formulation upgrades. Yet high prices, uncertainty and cautious buying are limiting near-term demand. The deeper problem is not only total volume. It is the availability of the right quality, especially approved Group III material.
The Strait of Hormuz sits at the centre of this risk. The source notes that the Strait had been largely blocked since the end of February 2026. Earlier market expectations assumed reopening and progressive normalisation from late August. That assumption has shifted. The newer crude and feedstock outlook points instead to reduced flows and repeated disruption through 2027, with a more reliable reopening only from early 2028. Under that scenario, recovery could begin during the first half of 2028, followed by a new normal in the second half.
That matters because base oil does not move through the supply chain in isolation. Freight, insurance, routing, refinery economics and customer approvals all influence whether a tonne of nominal capacity becomes a usable tonne at the buyer’s plant. A fall in headline prices would therefore not automatically mean that supply conditions have returned to normal.
The Persian Gulf dual supply shock
The strongest evidence of structural vulnerability appears in Group III. There is a Persian Gulf dual supply shock, with an estimated 35% of global Group III supply trapped and offline. Within the affected Gulf supply, Shell GTL in Qatar accounts for 69%, ADNOC in the UAE for 18% and BAPCO in Bahrain for 13%.
The second part of the shock is physical. Pearl GTL’s second train was damaged on 18 March. The source states that one train is available, while the other is expected to be repaired in Q1 or Q2 2027. But mechanical repair is not the same as effective market recovery. Both trains still depend on the constraint at the Strait of Hormuz being removed or materially eased before product can move reliably. Shipping, insurance, routing and delivery channels could therefore keep Group III availability tight even after plant readiness improves.
This is why Group III has moved from a temporary shortage to structural tightness. North America is highly import-dependent, Asia continues to record strong consumption growth, and the Middle East is the key surplus and export region. The difficulty is that the surplus is concentrated in the same geography where disruption risk is highest. Europe also remains exposed because of its reliance on OEM-approved Group III.
The pressure does not stop with Group III. Group II is less directly exposed to Gulf supply, but it is being tightened by substitution where Group III is short. Refinery economics add another constraint. Strong diesel and gasoil cracks can encourage refiners to maximise distillate output instead of base oils. Russian refinery outages, according to the source, have reinforced that incentive by tightening the global middle-distillate market. Group I faces more indirect pressure through crude costs, freight and refinery run decisions, although heavy neutrals and brightstock are relatively better supported.
Capacity relief from 2026 to 2028
The supply picture is not entirely negative. The source identifies 2.625 million tonnes per year of additional capacity across nine plants in four countries, with the last scheduled start-up in Q1 2028. India accounts for 1.305 million tonnes per year, almost half of the announced total. China contributes 750,000 tonnes, Saudi Arabia 300,000 tonnes and South Korea 270,000 tonnes.
India’s additions comprise 525,000 tonnes at IOC Panipat, scheduled for Q1 2027; 300,000 tonnes at HPCL Mumbai, scheduled for Q1 2028; 245,000 tonnes at IOC Haldia, shown as in operation from Q2 2026; and 235,000 tonnes at IOC Gujarat, scheduled for Q1 2027. China’s 750,000 tonnes comprise 400,000 tonnes at CNOOC Taizhou in 2027, 200,000 tonnes at Yitai Baoteng in Zibo in Q4 2026, and 150,000 tonnes at Shaanxi Future Energy in Q4 2026.
Saudi Arabia adds 300,000 tonnes at Luberef Yanbu in Q1 2027. South Korea adds 270,000 tonnes at HD Hyundai Oilbank in 2027, although the source notes that this is Group III capacity at the expense of Group II. These projects are substantial, but they should not be read as an immediate 2.625-million-tonne solution to the present market imbalance.
The source makes three cautions clear. Timing risk has increased. New production does not immediately solve the shortage of approved grades. Producers may also direct material toward higher-value export markets when overseas premiums are more attractive. The source points to India as an example where export netbacks can compete with, or outweigh, local supply needs. Additional capacity in Asia does not automatically stay in Asia.
The effective regional balance therefore depends on qualification, logistics, reliability and commercial incentives, not nameplate capacity alone. This distinction is particularly important for premium Group III material, where OEM approvals and formulation requirements can prevent buyers from switching molecules quickly even when alternative tonnes exist on paper.
What should buyers do?
For lubricant buyers in Bangladesh and elsewhere in Asia, the practical lesson is to treat security of supply as seriously as unit price. Procurement strategies built around a single supply route, a single approved molecule or the assumption of quick market normalisation carry more risk in this environment.
Companies should review supplier capability, scale of operation and diversification, inventory policies and alternative approved formulations before shortages become urgent. They should also distinguish between announced capacity, mechanically available capacity and commercially deliverable, approved supply. These are not the same thing. The first is an engineering number. The second depends on plant readiness. The third depends on logistics, qualification and commercial access.
The market may improve from its most disrupted months. Prices may also retreat from crisis peaks. But the source analysis suggests that a clean return to normal during 2027 is unlikely under its current assumptions. The more realistic path is a slower and uneven recovery stretching from 2028 to 2030.
The central message is simple. The present base-stock crisis is not only about price. It is about resilience. Capacity is being added, but logistics, refinery choices, approvals and geopolitical exposure will decide how much of that capacity reaches customers when they need it. For Asian lubricant markets, that distinction may define the next two years.
Md Shahin Alom is a PhD researcher in Petroleum Economics at PMRE, BUET, and Senior General Manager at MJL Bangladesh PLC.