Costco has raised the price of motor oil sold under the Kirkland private label and has also imposed a limit on the number of weekly purchases for customers. These changes come as oil prices are rising again, and consumers are facing concerns related to inflation and high food prices.
Price Increases and Purchase Limits
The Kirkland Signature full synthetic motor oil (5 quarts) is now selling for approximately $58, while this price was around $30 last year. Additionally, Costco only allows customers to purchase two boxes per week.
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Furthermore, the sale of Mobil 1 full synthetic motor oil (1 quart) is also limited to five units per membership at a price of around $44. Costco has not yet responded to requests for comments on this matter.
Reasons for Price Increase
Synthetic motor oil is heavily dependent on Group III base oils, which are primarily produced from crude oil refining. Estimates suggest that the United States imports more than 40% of these oils from the Middle East, where supply disruptions have occurred since the start of the Iran war.
The price of Brent crude oil rose above $109 per barrel on Monday morning, while conflicts in the Middle East continue to impact global oil flows. Additionally, a major Saudi oil pipeline will be largely out of service for several weeks due to an attack that occurred last week. This pipeline allows Saudi Arabia to shift its exports to the Red Sea and avoid the Strait of Hormuz in the Persian Gulf, where Iranian attacks are present.
The price of Brent oil has surged from less than $72 in early July due to doubts about the possibility of an agreement between the United States and Iran to allow the free movement of tankers in the Strait of Hormuz. The increase in Brent oil prices has raised the average price of a gallon of regular gasoline in the country to nearly $4.32 from $4.08 last month and $3.18 last year.
Meanwhile, diesel prices in the United States set a new record on Friday, averaging over $6 per gallon. On Monday, prices continued to rise, with diesel averaging $6.23 per gallon. Last week, the average price was $5.90 per gallon.
Response from Other Retailers
Gasoline and diesel prices are heavily influenced by crude oil prices. As oil prices continue to rise due to tensions in the Middle East, oil companies are likely to profit more from converting crude oil to diesel or gasoline rather than motor oil. The global demand for diesel and gasoline is significantly higher than for motor oil, and the daily volume is also high. Therefore, it appears that oil companies will focus more on diesel and gasoline production and reduce motor oil production.
It remains unclear whether other motor oil retailers such as Walmart, Amazon, and AutoZone will also raise their prices or impose purchase limits. These retailers have not responded promptly to requests for comments.
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Source: abcnews.com
