Hormuz Crisis Is Rewriting the Global LPG Trade

The effective closure of the Strait of Hormuz amid the 2026 Iran-related conflict has fundamentally altered global liquefied petroleum gas (LPG) trade flows. Middle Eastern exports from Saudi Arabia, the UAE, Qatar, and Iran slowed sharply as tanker traffic collapsed and infrastructure faced risks or attacks. Before the escalation, roughly 54 oil, chemical, and LPG tankers passed daily through the strait; by late May, the average had plummeted to about 11 vessels per day. The strait typically handled around 30% of seaborne LPG exports (roughly 44 million tonnes annually in recent years).

Propane prices reflected the shock. Texas Gulf Coast prices rose nearly 10% in early March and were roughly 25% higher by mid-June compared with pre-conflict February levels. Global benchmarks spiked even more sharply in Asia and Europe during the height of the disruption. The United States, already the world’s largest LPG exporter thanks to the shale revolution, stepped into the gap. U.S. exports surged to record levels, with volumes in some months exceeding previous highs as Asian buyers (especially India) and others sought alternatives. India, which historically relied heavily on Middle Eastern supplies (often 60–90% of imports routing via Hormuz), accelerated contracts and purchases of U.S. propane. Europe had already shifted toward U.S. barrels after sanctions redirected Russian LPG flows.

Private commodity traders with flexible fleets, such as BGN Group (reported as a major offtaker of U.S.-sourced LPG), played a critical role in rerouting cargoes and stabilizing supply chains. The crisis exposed the risks of over-reliance on a single chokepoint and accelerated a longer-term reorientation of LPG logistics toward lower-risk U.S. Gulf Coast and related routes, which also carried potential advantages in insurance and reliability. Global propane volumes are projected to continue expanding, with estimates pointing to over 213 million metric tons in 2026 and higher levels by 2031, even as Asia navigates periods of oversupply risk from rising U.S. shipments.

Largest U.S. Companies Positioned to Grow the LPG Business

U.S. midstream infrastructure operators with fractionation, pipeline, storage, and export terminal capacity are best positioned to capture and expand this opportunity. Growth is driven by Permian and other shale NGL production, existing wellhead-to-water systems, and multi-year expansions already underway or recently completed.

Enterprise Products Partners (EPD) operates the world’s largest LPG export terminal complex (Enterprise Hydrocarbons Terminal / Morgan’s Point on the Houston Ship Channel). It is adding approximately 300,000 barrels per day (bpd) of dedicated LPG (propane and butane) loading capacity targeted for late 2026, raising dedicated LPG capacity significantly. Its Neches River Terminal Phase 2 flex capacity (up to 360,000 bpd propane or combinations with ethane) has also come online or is ramping, providing critical flexibility. EPD maintains extensive Mont Belvieu fractionation and storage and reports high contracting levels on export capacity.

Energy Transfer (ET) runs major NGL export operations at its Nederland, Texas, terminal (with prior Flexport expansion adding flexible capacity) and Marcus Hook on the East Coast. In mid-2026, it announced further expansions at Nederland, including additional LPG capacity alongside larger ethane increments, new docks, pipeline upgrades from Mont Belvieu, and storage increases. Post-expansion, refrigerated NGL export capacity at Nederland is targeted above 1.25 million bpd, contributing to a company-wide refrigerated total approaching 1.7 million bpd when combined with Marcus Hook upgrades. Capacity is heavily contracted under long-term agreements.

Targa Resources (TRGP) operates the Galena Park Marine Terminal near Houston, a key LPG export facility. It is expanding effective capacity toward 19 million barrels per month (from roughly 14 million) via additional pipeline and refrigeration, with completion targeted for the third quarter of 2027. Targa’s integrated Permian gathering, processing, fractionation (Mont Belvieu), and export model supports volume growth.

ONEOK (OKE) and MPLX are jointly developing a new 400,000 bpd LPG export terminal in Texas City, Texas (Texas City Logistics), focused primarily on low-ethane propane and normal butane, with associated pipeline from Mont Belvieu storage. Targeted for early 2028 startup, the project expands Gulf Coast options and leverages existing infrastructure.

Other significant players include Phillips 66 (export and NGL marketing), integrated producers such as ExxonMobil and Chevron that contribute feedstock, and additional midstream names with fractionation or takeaway capacity (e.g., Williams, Kinder Morgan in supporting roles). Collectively, these companies are adding hundreds of thousands of barrels per day of export, fractionation, and processing capacity through 2027–2028, supporting U.S. dominance in seaborne LPG (already a large and growing share of global trade).

Implications for Consumers and Investors

For consumers, the near-term effect of the Hormuz disruption was higher prices and, in heavily import-dependent markets, tighter availability. In India and parts of Asia and developing economies, cooking-gas (LPG) costs rose sharply, and governments took emergency measures such as maximizing domestic refinery LPG output or securing alternative cargoes. Longer voyages from the U.S. Gulf increased freight and logistics costs. U.S. domestic consumers faced more moderate pressure thanks to high production, elevated inventories in many periods, and the fact that the U.S. is a net exporter; propane remains abundant relative to pre-shale eras. As Middle East flows partially recover and new U.S. capacity comes online, prices have shown correction potential, though residual geopolitical risk and demand recovery keep volatility elevated. Diversification toward U.S. supply improves long-term energy security for importers but does not eliminate price sensitivity to global balances.

For investors, the crisis has been a positive catalyst for U.S. midstream companies with LPG/NGL export exposure. Higher throughput volumes, elevated terminal fees during the tightest periods, and strong fee-based contracted capacity generate durable cash flows. Many of these MLPs and corporations (EPD, ET, TRGP, OKE, MPLX) already emphasize distribution growth or returns of capital supported by long-term contracts. Expansion projects are largely underpinned by customer commitments, reducing volume risk. Global LPG demand growth (residential, petrochemical, and emerging-market clean cooking) provides a multi-year tailwind, while the demonstrated reliability of U.S. supply during a major disruption enhances the strategic value of Gulf Coast infrastructure. Risks include potential oversupply once Middle East volumes normalize and new docks fully ramp, pressure on spot rates, and broader energy-price or regulatory factors. Overall, the shift reinforces the investment case for well-positioned U.S. NGL midstream assets as structural winners in a more multipolar LPG trade map.

The Hormuz crisis did not invent the rise of U.S. LPG exports—it accelerated and cemented a structural change already underway. Agile infrastructure, flexible traders, and growing export capacity have rewritten traditional Middle East-centric trade patterns. The result is a more resilient, if still volatile, global LPG market in which U.S. companies stand at the center of future growth.