Strait of Hormuz Disruption Leads to Tightening in Liquefied Petroleum Gas Market, Middle East Supply Disrupted

LootboxPhobia · 2026-03-17T10:54:25+00:00

Ongoing disruptions in the Strait of Hormuz have created tight supply and demand conditions for liquefied petroleum gas (LPG), with approximately 1.5 million barrels per day of Middle Eastern LPG stranded, thereby increasing demand for U.S. Gulf of Mexico cargoes. Despite rising demand, U.S. midstream companies struggle to increase exports because production capacity is already at maximum. Jefferies analysis indicates that once the market normalizes, there may be a risk of global LPG supply surplus in the future.

LootboxPhobia

2026-03-17 10:54:25

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Investing.com – According to Jefferies, the ongoing disruption of the Strait of Hormuz is tightening the supply and demand balance for spot liquefied petroleum gas (LPG). About 1.5 million barrels per day of Middle Eastern LPG are effectively stranded, which in the short term supports demand for cargoes along the U.S. Gulf Coast.

Despite increased demand for cargoes along the U.S. Gulf Coast, U.S. midstream companies have limited ability to capitalize on this situation. Most export capacity has already been contracted and cannot be expanded to increase exports because LPG is a byproduct, and existing export capacity is operating at maximum levels.

Jefferies notes that its bottom-up analysis indicates that once the current market dislocation subsides, there is a risk of oversupply of global LPG by the end of this century.

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