LPG carrier market hit by extreme volatility amid Middle East crisis

The LPG carrier market has entered one of its most volatile and complex phases in recent years, as the Middle East crisis and the disruption of flows through the Strait of Hormuz have affected traditional balances of supply, demand and available shipping capacity.

While the market was about to be supported by gradually rising US exports and strengthening Asian demand, it was abruptly disrupted by the loss of significant Middle Eastern volumes. This triggered a new operating landscape in which freight rates surged, trade flows shifted and uncertainty intensified. The key development is not only the disruption itself, but the collapse in predictability: within days, market participants and shipping companies moved from signals of normalisation to renewed operational ambiguity over the safety and continuity of key transit routes.

According to Veson Nautical, the LPG market faced extreme volatility in the first quarter of 2026.

The closure of the Strait of Hormuz removed around 30% of global LPG supply from the market, creating an immediate imbalance between available volumes and demand. The ammonia trade was also affected, with the Middle East accounting for roughly 25% of global exports.

As a result, VLGC earnings moved sharply higher, averaging around 75,000 dollars per day in the first quarter, up 56% year-on-year.

Exports decline, but ton-miles support market

In terms of cargo volumes, global LPG exports on VLGCs fell in March 2026 to around 2.7 million barrels per day, down from roughly 3.7–3.8 million barrels per day in previous months.

In effect, the market has strengthened as lost Middle Eastern volumes are being partially replaced by longer-haul US cargoes, which tie up more capacity and increase ton-mile demand.

Veson forecasts US LPG exports will rise by 7.1% in 2026, driven by stronger international demand as buyers seek alternatives to disrupted Middle Eastern supply.

By contrast, Middle Eastern exports are expected to decline by 7.9%, although the outlook remains highly sensitive to the duration of the conflict.