Key facts
- The Strait of Hormuz, a critical energy choke point, is effectively closed due to ongoing Iranian attacks on vessels.
- Liquefied petroleum gas (LPG) trade is being significantly disrupted, with major Middle Eastern exporters like Saudi Arabia, Qatar, and the UAE facing slowdowns.
- US LPG exports have increased, with propane prices rising due to supply tightening and alternative routes being sought.
- The US has become the world's leading LPG producer and exporter, driven by shale revolution advancements.
- Private commodity traders, such as BGN Group, are playing a vital role in navigating supply chains and finding alternative routes.
The ongoing crisis in the Strait of Hormuz, a vital energy transit point, is fundamentally altering the global liquefied petroleum gas (LPG) trade. Iranian attacks on vessels have led to the effective closure of the strait, disrupting traditional supply chains and causing significant price increases for propane.
Before the conflict, approximately 54 oil, chemical, and LPG tankers passed through Hormuz daily. However, traffic has plummeted to an average of 11 vessels per day, leading to a roughly 25% increase in the cost of propane per gallon since February. This disruption has exposed the vulnerability of relying on a single choke point and highlighted the importance of agile private traders.
The United States, bolstered by its shale revolution, has become the world's leading LPG producer and exporter. As Middle Eastern supplies are constrained, US exports are increasingly filling the gap, with countries like India shifting their import preferences from the Middle East to American propane. Sanctions on Russia have also contributed to this shift, pushing European markets towards US imports.
Private commodity traders are instrumental in navigating these disruptions. BGN Group, a major LPG-focused trader, is reported to be the largest offtaker of US-sourced LPG in 2025, managing over 10 million metric tons annually. Other key players include Petredec and Mitsui, who are vital in supplying growing markets in Asia.
The market for propane and butane is rapidly evolving, with traders aligned with US supply chains and operating in high-demand markets best positioned to benefit from this realignment.