The exact cause of the cut is difficult to assess but it will only apply to shipments that usually transit the strait of Hormuz, write Eunice Ng and Yaxiu Wang
State-controlled Saudi Aramco has informed some of its term customers that it will reduce propane exports in the first half of 2027 as it prioritises supply for the Saudi Arabian petrochemical sector.
Additional propane could be made available if petrochemical demand weakens, industry sources say. The domestic petrochemical industry currently absorbs about 85pc of Aramco's propane production of 13.3mn t/yr, Argus data show.
Saudi Arabia has four propane dehydrogenation plants with a combined propylene production capacity of 2.2mn t/yr. Private-sector firm Alujain is developing a 600,000 t/yr plant in Yanbu that is scheduled to start up next year. The country also has 16 ethylene steam crackers, all of which use ethane feedstock, while 10 can additionally use propane in varying degrees and two butane.
The drop in propane exports will only apply to shipments from Ras Tanura in the Mideast Gulf through the strait of Hormuz, while loadings from Aramco's Yanbu terminal on the Red Sea are expected to be maintained at current levels. The company exported about 7.1mn t of LPG in 2025, of which 5.4mn t came from the Juaymah terminal in Ras Tanura and 1.7mn t from Yanbu, Kpler data show. The product split was nearly equal at 3.8mn t of butane and 3.2mn t of propane.
No LPG cargoes have left Ras Tanura following an accident at the facility on 23 February, just before the Iran war started, and throttled most Mideast Gulf exports. This makes it difficult to gauge the scale, impact and cause of the cut.
The company has significantly increased its LPG exports from Yanbu since the war began, with shipments reaching a three-year high of 300,000t in June — 170,000t of propane and 130,000t of butane — according to Kpler. They then eased to 237,000t in July and 166,000t in August, with 108,000t and 74,000t of this propane, respectively. Only four VLGCs arrived in August as security concerns around the Bab el-Mandeb strait escalated following threats from Yemen's Houthi rebels. The terminal can load up to eight VLGCs a month, market participants say.
Some expect Juaymah loadings to resume this month, with Aramco issuing September acceptances to some buyers, market participants say. But it remains unclear if buyers will nominate vessels to load from Juaymah owing to prohibitive shipping and insurance costs related to security risks in the strait of Hormuz.
Fleet foxes
Abu Dhabi state-owned Adnoc's trading arm AGT and Kuwait's KPC have maintained LPG exports from the Mideast Gulf since April by using their own fleet of VLGCs to sail the US-protected southern Omani route with their AIS signal turned off then carrying out ship-to-ship transfers offshore Oman or west India. Adnoc's LPG exports rose to 497,000t in August from 177,000t in May, while loadings from Kuwait reached 443,000t in July before easing to 310,000t in August from 45,000t in May.
Aramco may be less able to use this strategy because of its limited fleet capacity. The firm charters four VLGCs on long-term contracts, with another expected to be delivered in the first quarter of 2027. In comparison, Adnoc acquired five VLGCs in August, expanding its fleet to 12, giving it more control over its supply chain.
Saudi LPG exports fell by 41pc on the year to about 2.8mn t in January-August, of which 1.7mn t was propane and 1.5mn t butane, Kpler data show, as a result of the Middle East conflict and the closure of the strait and damage to its export infrastructure. But long-term supplies are still expected to grow from pre-war levels as Aramco's Jafurah gas project is brought on line. The project is set to produce about 630,000 b/d of natural gas liquids and condensate and 420mn ft³/d (5.5mn-5.9mn t/yr) of ethane by 2030. Market participants had previously expected Jafurah to begin producing LPG in the second half of this year, although the conflict may have affected project schedules.
