Shifting Global LPG Supply
Much of the trade news in 2025 has focused on tariffs. This particular subject has generated a lot of discussion and countless questions. Almost daily, we see articles dealing with questions like these:
- What items will be tariffed?
- How long will these tariffs be in place?
- How will these tariffs impact me?
As we enter the fifth month of the year, the discussions and questions continue without pause. However, amid all these conversations, we are starting to see a shift in global supply patterns due to the global tariff war.
Tariff War has China Searching for Other LPG Supply Options
The “tit-for-tat” tariff war between the United States and China has resulted in tariffs of about 145% on Chinese goods coming into the U.S. and tariffs of about 125% on U.S. goods going into China. These extra charges have caused China, a major LPG importer from the U.S. for many years, to rapidly search for other LPG supply options that do not carry tariffs.
India Could Boost U.S. LPG Exports
Multiple reports over the last several weeks have documented this search and its results. The Business-standard.com started a recent article with the following statement:
“Chinese import tariffs have unwittingly come to India’s assistance to help boost imports of U.S. liquified petroleum gas (LPG) at rates cheaper than what it pays for supplies from West Asia.”
Further in that same article was this key stat:
“India is a $12 billion LPG Market, equivalent to a third of its trade surplus with the U.S. for 2024. India’s LPG market is dominated by supplies from United Arab Emirates, Qatar, Kuwait, and Saudi Arabia.”
Why is this important?
Two major reasons:
- U.S. tariffs, per one of President Trump’s statements, have been initiated to reduce trade deficits with other nations. U.S. LPG could solve part of a perceived trade imbalance with the U.S.
- India has long been a major customer of Middle Eastern nations. Tariffs are now opening the door for a new major supply source – the United States.
Have Global LPG Supply Trends Shifted?
While this seems like a reasonable theory, we have to ask the question, have global supply trends really started to change? According to a Reuters article from May 2, 2025, Bharat Petroleum Corp believes they may receive $20 – $30/ton savings by swapping out U.S. LPG for Middle Eastern supply.
Going back to the Business-standard.com article, we see that Indian Oil recently purchased a U.S. LPG cargo at a savings of $15/ton and stated that they could see as much as $10/ton savings on other transactions.
Even Middle Eastern suppliers are getting into the global supply shift. At the end of April, another Reuters article stated that Abu Dhabi National Oil Company (national oil company for the United Arab Emirates) will “start replacing some of the [LPG] it supplies to India with cheaper U.S. cargoes from June.” Why do this? Because this now allows the Middle Eastern firm to sell more product to China.
Conclusion
Tariffs are clearly starting to shift the movement of global LPG supply. But there are still a few important constants to remember.
- U.S. LPG supply remains one of the cheapest in the globe and will continue to be exported.
- Movement of LPG will always migrate to the highest available price. Right now, that is in China, and Middle Eastern supply is migrating in that direction. This migration is creating other opportunities in other nations.
We are not even halfway through 2025 yet, so we are likely not done seeing the impacts of tariffs. The Westlark Advisors team will continue to closely watch this developing situation and will keep you updated as we move though the rest of this year.
Current Events – May 2025
By JD Buss
