Middle East Gulf LPG Exports Hit Quarterly Record High

This article originally appeared in the OPIS Global LPG & Naphtha Report. Explore our trusted market insights powered by the OPIS Mont Belvieu benchmark. Sign up for a free trial here.

Liquefied petroleum gas (LPG) exports from the Middle East Gulf climbed to a record high in the second quarter of the year, exceeding the previous high by 12.9%, data from shipping analytics firm Vortexa showed.

LPG shipments from the region reached 11.39 million metric tons in April-June, up from 10.09 million mt in January-March and 9.11 million mt a year earlier.

The United Arab Emirates (UAE) was the largest exporter of LPG in the second quarter, making up around 26% of total shipments from the region. The country shipped 2.96 million mt in April-June, 57.5% (1.7 million mt) of which was destined for India. China was the second largest recipient taking 29.7% of flows.

Qatar and Iran followed closely behind the UAE in the second quarter, exporting 2.62 million mt and 2.3 million mt, respectively.

Atypically, China was the largest recipient of Middle East Gulf supply in the second quarter. India has held this title since the second quarter 2018, Vortexa data showed.

In April-June, China received a total of 5.09 million mt of LPG from the Middle East Gulf, up from 2.58 million mt in January-March and 1.94 million mt a year earlier.

While exports to India dipped to 4.64 million mt in the second quarter, down from 5.7 million mt in January-March and 4.69 million mt a year earlier.

The shift in dynamics came as a result of the imposition of tariffs by the U.S. on China in April. One result of the global flow  dislocation caused by the tariffs’ imposition was an increase in interest from Middle East Gulf buyers
purchasing relatively cheaper priced U.S. volumes to send to India, as they used cargoes sourced in the Middle East to supply China.

With considerably more LPG being exported from the U.S. to India, less was needed from the Middle East Gulf. The U.S. shipped 925,000 mt of LPG to India in the second quarter, nearly treble the previous record of 318,000 mt in Q1 2020.

Simultaneously, reciprocal tariffs between the U.S. and China, meant the latter had to look elsewhere for its supply, notably the Middle East Gulf.

More recently, the rapid rise in tensions between Israel and Iran in mid-June has spiked volatility in the Very Large Gas Carrier (VLGC) market. The conflict created even more fragmentation in pricing with multi-tier VLGC markets appearing within the Middle East Gulf and on other linked routes.

The OPIS assessed Ras Tanura-Chiba VLGC rate peaked at $88/mt on Jun. 23, its highest level since May. 21 last year.

Looking ahead, more LPG could be exported from the region, following the decision from the Organization of the Petroleum Exporting Countries (OPEC) to increase crude oil output by 411,000 b/d in May and June, rolling back the cuts that were in place. Production is expected to increase by a similar amount this month and the group is widely expected to extend this into August.

–Reporting by Jamie Aldridge, jaldridge@opisnet.com; Editing by Yazdi Merchant, ymerchant@opisnet.com

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