WD-40 says rising costs for petroleum-based specialty chemicals are beginning to feed into its supply outlook, with the company linking part of the pressure to geopolitical developments in the Middle East.
Speaking during an earnings call on 9 April, chief financial officer Sara Hyzer said the effect of higher raw material costs generally takes between 90 and 120 days to appear in the company’s cost of products sold. She attributed that lag to WD-40’s production cadence and inventory cycles.
Based on current inventory levels, Hyzer said the company does not expect gross margin to be significantly affected until the fourth quarter of fiscal year 2026. She added that the length of the conflict and its impact on raw materials would shape the company’s decisions on mitigation measures, which are still being assessed.
Continued disruption in the Strait of Hormuz, linked to the Iran war, has sharply restricted oil flows through the corridor and contributed to a surge in global oil prices. That matters for WD-40 because many of its products rely on petroleum-derived ingredients.
For the company, however, direct commercial exposure to the conflict remains relatively limited. Chief executive and president Steven Brass said the Middle East accounted for about 3% of WD-40’s global sales in fiscal 2025, which ended in August. The company’s presence in the region includes one manufacturing partner as well as third-party distributors handling sales.
Despite rising cost pressure, WD-40 said it still expects to meet its fiscal 2026 guidance for net sales growth of 5% to 9% year on year. That forecast now assumes crude oil prices in a range of $95 to $115 per barrel, compared with an earlier assumption of $65 to $85.
The wider effects of the war are also spreading across supply chains. Lamb Weston said earlier this month that it expects international volumes to decline in the second half of its fiscal year ending 31 May, partly because of the evolving Middle East conflict.
The food company also said it is preparing for increased commodity volatility, including in packaging and fuel, if the war continues. Chief executive Mike Smith said the full impact would depend on both the duration and severity of the conflict.
More broadly, the war has disrupted packaging supply chains and increased costs across the consumer packaged goods sector, which is already dealing with uncertainty created by tariffs imposed by the Trump administration.
Delivery costs are also rising as higher fuel prices trigger additional surcharges and rate increases from parcel carriers such as FedEx and UPS. At the same time, some shippers are reportedly shifting toward shorter three-month air cargo agreements rather than annual contracts due to the uncertainty created by the conflict.
