Can he tell you what it is about the lipbalm that he likes? is it primarily the smell, the taste or the consistancy? does he feel better having something to rub on himself (self comforting?) It's hard to know how to deal with these problems when often the child doesn't know what is wrong.

Has he been worked up by a professional? That might get you better access to people who could help you more. Hang in there. These obsessions can be very frustrating and distressing. Try giving him as much structure as you can at home, when he studies, when he sleeps, what routines he has should be followed as closely as you can when he starts in school again. That way he can at least know what to expect from minute to minute at home, even if school can be hard. Do you have contact with his new teacher?
Good luck! HUGGGS!