The Middle East supply crunch has led to soaring freight rates to ship liquefied petroleum gas (LPG) to Asia from other regions, prompting some buyers to cancel U.S. cargoes due to the high shipping costs.
Buyers have so far canceled at least two cargoes of LPG, the main cooking fuel in India and a key petrochemicals feedstock in China, which were previously slated to depart from the U.S. Gulf Coast in June, sources with knowledge of the matter told Bloomberg on Thursday.
Buyers are also in discussions to cancel additional cargoes as the high freight costs eat into the margins of the LPG importers, according to Bloomberg’s sources.
Buyers in Asia, including top energy importers China and India, have turned to U.S. LPG to partially replace the supply lost from the Middle East.
LPG exports from the Persian Gulf supplied 92% of India’s and 26% of Southeast Asia’s imports in 2025, according to data by Vortexa.
With Middle Eastern exports now constrained, the U.S. is sending higher volumes of LPG, propane, and butane to Asia.
“As uncertainty persists over Middle East Gulf LPG production and exports, US LPG is likely to remain firmly positioned in the Asian markets at least through May – H1 June,” Anna Zhminko, associate market analyst at Vortexa, said at the end of March.
However, the soaring freight rates are now easing demand for U.S. LPG cargoes, according to Bloomberg’s sources.
Meanwhile, India, which uses LPG as its main cooking fuel and has felt shortages since the Iran war choked supplies at the Strait of Hormuz, seeks to boost its supply agreements. Earlier this month, India signed a strategic agreement with the United Arab Emirates to receive liquefied petroleum gas from the UAE.
In addition, India-bound LPG tankers have started to move through the Strait of Hormuz with transponders off on part of the route as dark activity rises among commercial shipping and a growing number of vessels exit the chokepoint.
By Tsvetana Paraskova for Oilprice.com
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