Key insights
- Saudi Aramco and Sonatrach significantly raised LPG prices due to supply constraints stemming from Middle East tensions and disruptions in the Strait of Hormuz. This could lead to higher energy costs globally, potentially contributing to inflationary pressures and negatively impacting consumer spending, which could weigh on US equities.
Investing.com -- Saudi Arabia’s state oil producer Saudi Aramco and Algeria’s Sonatrach have raised official selling prices for liquefied petroleum gas in April by between 38% and 80% due to limited global supply, traders said.
The war in the Middle East has led to the largest energy supply crisis in decades, pushing global prices to multi-year highs.
Some LPG production capacity in the Gulf has been damaged, and shipments of propane and butane from countries in the region have been suspended since early March due to the closure of the Strait of Hormuz. The region previously accounted for approximately 30% of global seaborne LPG exports.
Saudi Aramco’s April official selling price increased by $205 a metric ton to $750 a ton for propane and by $260 a ton to $800 a ton for butane.
Sonatrach increased its April official selling price for propane by $325 a ton to $850 and for butane by $400 a ton to $900 a ton.
Propane and butane are types of LPG with different boiling points. LPG is mainly used as fuel for cars, heating and as a feedstock for other petrochemicals.
Saudi Aramco’s official selling prices are used as a reference for contracts to supply LPG from the Middle East to the Asia-Pacific region. Sonatrach’s official selling prices are used as benchmarks for the Mediterranean and Black Sea region, including Turkey.
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