Penthol Declares Force Majeure on ADNOC Base Oil Supply
Penthol has declared force majeure on its supply of AD base oil from ADNOC, citing the Iran conflict and continuing production and supply-chain disruptions.
In a July 15 notice to customers, Penthol said the disruption has resulted in the cessation of AD base oil supply from ADNOC and has affected its ability to meet contractual obligations. The company said the situation has materially affected, and could continue to affect, the production, transportation and supply of the base oil covered by its customer contracts.
The company cited transportation difficulties, unplanned outages, equipment failures, power disruptions, government actions, war-related events and reduced or unavailable supply at the customary source among the circumstances covered by the notice.
Penthol did not provide an estimate for when deliveries may resume. “The duration of the disruptions and cessation of supply is currently unknown,” the company said in the notice. Penthol added that it is monitoring developments and communications from ADNOC and evaluating alternative supply arrangements and logistics options to restore deliveries as soon as practicable.
The declaration represents another significant development for a Group III base oil market already facing uncertainty surrounding Middle East production, vessel availability and transportation through the region.
For U.S. lubricant manufacturers and marketers, the immediate question is whether existing domestic inventories can support demand while ADNOC supply to Penthol remains interrupted, and whether alternative Group III volumes can be secured.
The notice does not state that ADNOC has declared force majeure, nor does it indicate that ADNOC has halted all base oil production or shipments worldwide. It states specifically that Penthol’s supply of AD base oil from ADNOC has ceased.
