LPG Prices 2026 — Hormuz Losses, Record US Propane Exports and Saudi CP

How much Middle East LPG has the market lost?

Liquefied petroleum gas (LPG) is a mix of propane and butane. It is used for heating, cooking and road fuel, and as a petrochemical feedstock. LPG prices in 2026 have been driven by the loss of Gulf supply. According to Argus, about 44.2 million tonnes (Mt) of LPG passed through the Strait of Hormuz in 2025, around 30% of global seaborne exports ^[1].

Hydrocarbon Processing reported in April that Gulf shipments of propane and butane had been suspended since early March ^[2]. Saudi Aramco declared force majeure on LPG loadings from its Juaymah natural gas liquids (NGL) facilities, which supply the Ras Tanura terminal ^[3].

Recovery has been partial. The International Energy Agency (IEA) reported that Middle East LPG shipments rose by 90,000 barrels per day (b/d) to 670,000 b/d in September, against about 1.5 million b/d before the war. Middle East product and LPG flows remain below half of pre-war levels ^[4]. Vortexa data cited by OPIS show that Middle East LPG exports to Asia were about 4 Mt a month before the war. No month since has exceeded 1.5 Mt, and August was estimated at 1.17 Mt ^[5]. The Red Sea offers little relief. Asia-bound exports from Aramco's Yanbu terminal were 71,200 tonnes in August and an estimated 51,700 tonnes in September ^[5].

How have LPG prices and the Saudi CP moved in 2026?

Saudi Aramco's monthly contract price (CP) is the reference for Middle East LPG sold to Asia-Pacific buyers ^[2]. Prices jumped as soon as the war began. In the first week of March, North West European propane headed for its largest weekly gain on record, more than $160 a tonne, reaching $718.50/t on 5 March ^[3]. Between 27 February and 18 March, the Argus Far East Index (AFEI) rose 53% for propane and 66% for butane. Indian import offers for April reached about $1,000/t ^[1].

Aramco raised its April propane price by $205/t to $750/t, and butane by $260/t to $800/t. Algeria's Sonatrach, whose prices are benchmarks for the Mediterranean and Black Sea, including Türkiye, raised propane by $325/t to $850/t ^[2]. In June Aramco set propane at $760/t and butane at $820/t ^[6].

Prices then eased before rising again. The September CP was $625/t for propane and $660/t for butane ^[5]. For October, Aramco set propane at $680/t and butane at $730/t ^[7]. For comparison, the November 2025 CP for propane was $475/t ^[8]. At the end of August, Far East propane swaps were $775/t for September and $738/t for October ^[5].

Delivered costs add freight and premiums. Bangladesh's energy regulator used freight and importer premiums of $250/t in its October price calculation, up from $160/t in September ^[7].

Can US propane exports fill the gap?

The US Energy Information Administration (EIA) says propane exports averaged about 2 million b/d in the first half of 2026, up 11% year on year. They reached a record 2.1 million b/d in April, as petrochemical producers and importers replaced disrupted Middle East supply, and have stayed well above the five-year average since ^[9]. S&P Global Commodities at Sea data put total US LPG exports, including butane, at a record 3.3 million b/d in April. Japan took 460,000 b/d and China 457,000 b/d, making them the largest single buyers. Platts reported that the US share of the global waterborne LPG market has risen to about 50%, from about 25% a decade earlier ^[10].

The EIA warns that export terminal capacity could limit further growth ^[9]. Enterprise's 300,000 b/d Houston expansion is due to start up in the fourth quarter of 2026 ^[9,10]. Kpler expects it to ramp up in the first quarter of 2027, with Targa's 130,000 b/d Galena Park expansion following in the third quarter ^[11]. ONEOK plans a 400,000 b/d terminal at Texas City for early 2028 ^[10].

US stocks are high but falling fast. EIA data cited by RBN Energy show that propane and propylene inventories fell by 3.8 million barrels between 25 September and 16 October, the steepest decline for that period in at least ten years. At 105.8 million barrels, stocks were still 13% above the five-year average and 3% above a year earlier ^[12].

Which Asian buyers are most exposed?

India is the most exposed large buyer. Drewry estimates Indian consumption at 33 Mt in 2025, with domestic output meeting less than 40% of demand and about 90% of supply coming from the Middle East ^[13]. Gulf News reported in March that India imports about 60% of its LPG needs and that nearly 90% of those shipments pass through Hormuz ^[14]. The government told refiners to maximise LPG output and curtailed supplies to industrial and commercial users to protect households ^[13]. It also raised the minimum interval between cylinder bookings from 21 to 25 days ^[14].

Replacing Gulf cargoes takes time. US cargoes take 35–40 days to reach India, against 10–12 days from the Middle East. Indian refiners signed a 2.2 Mt US supply deal for 2026 in late 2025 ^[10,13].

China has bought less US propane. The EIA says US propane exports to China fell 19% in the first half of 2026. China has applied a 10% tariff on US propane since February 2025, apart from a rise to 125% in April 2025 ^[9]. Freight is a shared cost for North Asian buyers: OPIS uses its Houston–Chiba rate as the base for derived routes to Ningbo in China and Yeosu in South Korea ^[15].

Why are VLGC freight rates at record highs?

Very large gas carriers (VLGCs) carry most long-haul LPG, and longer voyages have absorbed ships. OPIS assessed its Houston–Chiba rate in the mid-$140s/t before the war. It passed $200/t in mid-April and $300/t in May ^[16]. RBN Energy reported a then-record $307.5/t on 11 May, up 126% since the start of the year ^[17], and the OPIS rate closed at $320/t on 27 May ^[16]. About half of US–Asia LPG vessels were then routing via the Cape of Good Hope to avoid Panama Canal congestion, a voyage 10–15 days longer ^[16].

The Baltic Exchange reported new highs for ex-US freight in mid-September. Its Houston–Chiba route (BLPG3) gained $32.71 to $320.71/t, equal to time-charter earnings of $193,696/day. Ras Tanura–Chiba (BLPG1) settled at $242/t, and several ex-US fixtures were concluded above $300/t ^[18].

The Panama Canal remains a constraint. Kpler noted cuts in daily Panamax transits from 26 to 25 on 3 September and to 23 on 15 September. It expects upward pressure on VLGC freight and delivered prices in East Asia through the second quarter of 2027 ^[11]. Vortexa data cited by OPIS put US–Asia flows at an estimated 3.55 Mt in September, down from 4.21 Mt in August, as canal fees rose ^[5].

What is the outlook for winter LPG demand?

Last winter offers a contrast. In November 2025, with the propane CP at $475/t, Argus expected little winter strength compared with previous years, citing warm weather and weak petrochemical demand ^[8]. This winter starts with tighter supply. Kpler's base case assumes Middle East supply returns only in the first quarter of 2027 ^[11]. Argus warned in March that supplies would stay tight for an extended period even if the strait reopened ^[1].

Weather adds risk to logistics. Kpler cites a US National Oceanic and Atmospheric Administration (NOAA) forecast of a greater than 90% chance of a very strong El Niño this autumn and winter, pointing to below-normal rainfall in the Panama Canal region ^[11]. US stocks still provide a cushion, but they are drawing early ^[12], and the next large US export expansions ramp up in 2027 ^[11].

What to watch

• November CP: whether Aramco's next posting extends October's rise.
• Gulf loadings: monthly Middle East LPG shipments and Hormuz transits.
• Panama Canal: transit limits and the share of US cargoes sent via the Cape.
• US inventories: whether stocks fall below last year's level as exports stay strong.
• Indian demand: whether household booking limits remain in place through winter.

Alupetra follows LPG pricing, supply and freight from its Istanbul, London and Dubai offices.