European propane prices staged an unprecedented rally on Monday morning, surging by more than $100/t as escalating conflict in the Middle East raising the prospect of sever supply disruption. The increase in propane outpaced that in crude, highlighting the strength of the move relative to the broader complex.
The northwest Europe propane swap for April climbed to its highest since January 2025, hitting an intraday high of $590/t as of 09:30 GMT, a rise of $106/t from Friday's close, equivalent to a 22pc gain.
In Asia-Pacific, the equivalent Argus Far East Index (AFEI) paper contract rose by 17pc to $657/t, up by $95.50/t on the day. Saudi state-controlled Aramco linked contract price (CP) paper was was up by nearly $50/t to $595/t, an 8pc increase.
The European price rise is the sharpest for a day ever seen. Even during the global Covid-19 pandemic prices did not climb by more than $50/t in a single session, making Monday's surge a stark indicator of how supply risk is being priced in by the market.
Propane's gains are even more striking when compared with movements in other commodities. Front-month Ice Brent crude futures rose by 13pc initially before pulling back.
Asia-Pacific LPG market participants said physical trading is subdued, as sellers hold back. The conflict has effectively shut the strait of Hormuz. Asia-Pacific, the world's largest propane consuming region, relies heavily on Middle Eastern supply, particularly from Iran.
Shipping data show Iran was the second largest exporter of propane to Asia-Pacific in 2025, sending around 9mn t. This figure reflects only tracked movements, and Tehran operates a shadow fleet that operates outside tracked systems.
China, the world's single largest propane consumer, has over the past year sought to reduce its reliance on US LPG because of deteriorating trade relations, and has sought new supply sources.
Kpler data show China cut imports of US LPG to 11.5mn t in 2025, from 17.8mn t in 2024, filling the gap with greater inflows from the Middle East and other suppliers.
This supply gap arising from the Middle East conflict is compounded by Aramco's force majeure at the Ras Tanura.
Europe faces the prospect of the US LPG on which it is heavily reliant being diverted further east. Kpler data show northwest European imports of US LPG have already tightened in recent months, falling by 11pc on the year to 578,000t in February and pushing the physical premium to a three-year high against paper in that month.
These upward swings could just as quickly reverse if the supply shock fails to materialise. Several factors could reduce the need for Asia-Pacific buyers to turn more heavily to US LPG. On Monday, China's propane dehydrogenation (PDH) plants were expected to cut operating rates by at least 10pc in the coming week, which would trim import requirements and soften the effect on global balances.
