LPG is the oil product most affected by the effective shutdown of the strait of Hormuz, the IEA said today.
In its latest monthly Oil Markets Report (OMR), the agency estimated LPG flow disruption at 1.5mn b/d, with naphtha following at 1.2mn b/d. As a result, it trimmed its annual demand growth forecast for LPG and ethane by 170,000 b/d to 150,000 b/d, with China and India accounting for two-thirds of the downward revision. The IEA said 99pc of Middle East LPG exports go to Asia-Pacific.
The IEA said India is facing the biggest challenge from the loss of supply, as it takes more than 45pc of total Middle East exports as part of its 1.1mn b/d consumption. This has grown rapidly in recent years as government schemes have promoted its use for clean cooking. About 90pc of India's LPG demand comes from the domestic sector, and limited storage infrastructure leaves consumers particularly exposed to the immediate effects of any supply losses. The IEA revised India's LPG and ethane demand down by 200,000 b/d in March and April.
Without LPG flows through the strait of Hormuz, a route that allows tankers to reach India's west coast in less than a week, replacement supplies are taking much longer to arrive. Voyages from the US to India require five to six weeks.
China, the world's largest consumer of LPG, is also vulnerable to the loss of product and would have to substitute part of its petrochemical feedstock intake with other fuels and curb production rates.
The disruption is redrawing trade flows elsewhere. Europe does not import LPG directly from the Mideast Gulf,relying mainly on the US and Algeria, but there will be stronger competition for Atlantic Basin cargoes from Asian buyers.
The US exported an average 2.3mn b/d of LPG in 2025 and could have an estimated 450,000 b/d of spare export capacity. That would not fully replace the Mideast Gulf shortfall, especially as US exports are heavily weighted towards propane rather than the more balanced propane-butane mix typical of Middle Eastern supply.
The IEA said member countries agreed on 11 March to make 400mn bl of oil from the emergency reserves available to the market, which it said is a "stop-gap measure".
