Iranian Attacks Close Strait of Hormuz Disrupting Global LPG

Ongoing attacks on vessels by Iran have effectively closed the Strait of Hormuz, creating a severe bottleneck in global liquefied petroleum gas (LPG) supply chains. Daily tanker traffic through the waterway dropped from 54 vessels per day before the conflict to an average of 11 by late May. This disruption has significantly slowed exports from major Gulf producers, including Saudi Arabia, the United Arab Emirates, and Qatar.

The supply shortage drove propane prices at the Texas Gulf Coast up approximately 25% by mid-June compared to February levels. In response, global markets are realigning to replace Middle Eastern supply with shipments from the United States, the world's leading LPG producer. India, which traditionally relied on Middle Eastern imports, is increasingly sourcing American propane to maintain its energy needs.

Private commodity traders are managing this transition by utilizing flexible fleets to stabilize global supply. Firms including BGN Group, Petredec, and Mitsui are facilitating the shift toward U.S. sources. Simultaneously, the United States Navy has implemented a blockade to turn back Iranian tankers, further restricting traffic in the region.