Category

Countries

Aramco Pushes Up LPG Prices Amidst Global Market Turmoil
Aramco Pushes Up LPG Prices Amidst Global Market Turmoil

Aramco Pushes Up LPG Prices Amidst Global Market Turmoil

  • 07-Feb-2024 2:13 PM
  • Journalist: Peter Schmidt

The Saudi Arabian oil Company released its official selling price for LPG (Liquified Petroleum Gas) for February 2024. This recent increase in Saudi LPG prices was partially attributed to rising Crude oil costs, which led the official benchmark to raise the offered quotations. Moreover, the surging demand for LPG from the Asian market further contributes toward an uptrend.

At the beginning of February, Saudi Aramco, the major player in the LPG market, announced its official selling prices for February hike by USD 10 per tonne for both propane and butane, pushing current prices to USD 630 and USD 640 per tonne, Ex-Dhahran, Saudi Arabia respectively. This directly impacted regional LPG prices as propane and butane are derived from Crude oil. While crude oil price movements influence LPG costs, they are not the sole factor. Regional supply and demand variations, infrastructure, and storage capacities also play a significant role. The rise in the LPG price was attributed to the ongoing global market implications. The war in the Middle East has disrupted supply chains and created uncertainty in the global LPG market, pushing prices upward. The announcement of reduced transit slots triggered initial panic. Re-routing via Suez and Cape of Good Hope extended shipping times, leading to a spike in Asian propane prices. Moreover, the limited Panama Canal transits added additional shipping time which further impacted the manufacturers to raise the prices for LPG quotations. As a ripple effect, higher Butane and Propane contract prices in the international market forces led to increased contract prices for these key ingredients. This was further compounded by the fact that propane and butane are sourced from various countries, adding to the complexity of price fluctuations.

As per the data, the contribution of US Refinery activity has further supported the uptrend. The recent decline in US crude oil refinery inputs which were down by 428,000 barrels per day suggested a potential tightening of global supply, which has directly affected LPG prices. Now, talking about the inventory levels, US commercial crude oil inventories are still below the five-year average, despite recent increases indicating potential supply constraints. Additionally, propane inventories also decreased, contributing to the price pressure as the increased demand, particularly in Asia for heating and petrochemical processes, further strained supply and pushed the LPG prices higher.

As per ChemAnalyst, the LPG quotations for March are also expected to showcase a bullish trend amid the ongoing supply disruption in the international market. Moreover, the continuously rising cost of crude oil production is foreseen to play a role in the high LPG prices in Saudi Arabia in the upcoming period.

Related News

Aramco Lowers the April LPG Quotations Amidst Shift in Demand
  • 17-Apr-2024 2:06 PM
  • Journalist: Gabreilla Figueroa
Solvang Once Again Picks Wärtsilä for New Vessel Cargo Handling Systems
  • 09-Apr-2024 5:45 PM
  • Journalist: S. Jayavikraman
TotalEnergies and Bapco Energies Form Partnership to Enhance Petroleum Products Trading
  • 06-Mar-2024 6:23 PM
  • Journalist: Harold Finch
Babcock's LGE Division Secures LPG and Ammonia Contracts in China
  • 07-Feb-2024 11:56 AM
  • Journalist: Francis Stokes