Aramco price cuts, US sanctions, and Panama Canal disruptions shape LPG flows

The LPG market softened through October as geopolitical, and policy shifts reshaped trade patterns and constrained near-term activity. While fundamentals such as US export strength and Asian import growth remain supportive, short-term sentiment was weighed down by price adjustments and sanctions, driving logistical uncertainty.

Saudi Arabia’s Aramco lowered its October official selling prices (OSPs) to USD 495 per tonne for propane, down USD 25. The reduction reflected weaker Asian demand and narrowed the US-Asia arbitrage, prompting some buyers to rely on inventories rather than commit to long-haul imports from the US Gulf.

Sonatrach raises gas prices as demand ramps up for winter months
In contrast, Algeria’s Sonatrach increased its prices for propane and butane, citing stronger demand, according to Zawya. Sonatrach’s OSPs are used as benchmarks for the Mediterranean and Black Sea region. Propane and butane are both forms of LPG, commonly used for heating and transportation fuel. This increase in demand reflects the seasonal need for increased heating across Europe and the Mediterranean as the region moves into the winter season.

US sanctions in early October targeted Iranian oil and LPG networks, adding dozens of vessels to the Treasury blacklist. This raised compliance risks for charterers and owners, slowing fixture activity and prompting more cautious routing. Meanwhile, India’s state refiners plan to lift US LPG imports to 10% of total intake by 2026 (from 7% in 2025), reflecting efforts to diversify away from the Middle East and supporting future trans-Pacific trade.

Panama Canal disruption set to last into next year
Operationally, ongoing Panama Canal drought restrictions and booking limits continue to disrupt VLGC economics, with some vessels rerouting via the Cape of Good Hope. Reduced transit slots are expected at least through Q1 2026, sustaining higher voyage costs on US-Asia routes. Overall, October’s combination of lower Middle East LPG prices, increased compliance scrutiny, evolving sourcing strategies, and canal bottlenecks collectively weighed on short-term freight sentiment. Yet with Asian consumption expected to rise, the longer-term outlook for the VLGC segment remains structurally firm once current dislocations ease.