Costco has increased the retail price of motor oil sold under its store brand while also imposing restrictions on the amount customers can purchase. This decision has been made as global oil prices are rising again.
Price Increase and Purchase Limits
A two-pack of Kirkland Signature full synthetic motor oil at Costco is now selling for nearly $58, significantly higher than last year's price of around $30. Additionally, each customer's purchase is limited to two packs per week.
Impact on the Motor Oil Market
Furthermore, Costco has limited purchases of Mobil 1 full synthetic motor oil, which is sold in six one-liter bottles and priced at around $44, to five units per account. Costco has not responded to requests for comment.
Modern synthetic motor oil heavily relies on Group III base oils, which are primarily produced through the refining of crude oil. Estimates suggest that the United States imports over 40% of these oils from the Middle East, where oil supply lines have been disrupted due to conflicts involving Iran.
The price of Brent crude oil rose above $109 a barrel on Monday, and ongoing conflicts in the Middle East continue to affect global oil movements. A major Saudi oil pipeline will be largely closed for several weeks due to a recent attack, which served as a route for transporting Saudi export shipments to the Red Sea.
The price of Brent oil has surged from below $72 in early July, while concerns about the U.S. and Iran reaching an agreement that would allow safe passage for tankers through the Strait of Hormuz have increased.
Rising crude oil prices have pushed the national average price of regular gasoline to nearly $4.32 per gallon, up from $4.08 last month and $3.18 a year ago. Meanwhile, diesel prices have also hit a new record, surpassing $6 per gallon.
Energy companies seem to be focusing more on fuel production rather than motor oil production due to ongoing instability in the Middle East, as global demand for gasoline and diesel significantly exceeds the demand for motor lubricants.
It remains unclear whether competing motor oil retailers like Walmart, Amazon, and AutoZone will also raise prices or impose restrictions.
Source: independent.co.uk
