According to Drewry, a maritime data firm, multiple very large gas carriers have changed course from the Gulf of Oman toward the United States Gulf Coast. This shift follows a blockade at the Strait of Hormuz, which has interrupted a substantial portion of global liquefied petroleum gas supply. The situation is causing buyers to seek alternative cargoes as Middle Eastern LPG shipments are disrupted.

Read also: Middle East Conflict Rewrites Container Shipping Outlook, Easing Overcapacity Fears

The blockade is linked to an escalating regional conflict. It has created serious concerns for the Asian petrochemical sector and for shipping overall. The blockage affects a major share of global naphtha supply, a key feedstock. Many petrochemical plants in Asia depend on imported naphtha, and a prolonged disruption could lower operating rates at these facilities.

In response to tightening supplies, one national government has implemented several measures. These include limiting LPG deliveries to petrochemical consumers, giving priority to residential use, and instructing domestic refineries to increase LPG output. The government has also directed oil companies to secure alternative cargoes. In that country, LPG is a primary cooking fuel, making demand less sensitive to price changes and raising the risk of critical shortages.

The potential halt of naphtha and LPG shipments from the Arabian Gulf threatens to cause significant feedstock shortages for petrochemical producers worldwide. This could place pressure on producers, potentially reducing operating rates and disturbing global trade flows for petrochemicals. The industry is already confronting difficult conditions, with rising feedstock costs or supply shortfalls possibly leading to production shutdowns.

Within shipping, schedules for intra-Asia petrochemical transport are expected to be disturbed, with a number of vessels likely to become idle. This development may impact freight rates. Time charter rates for smaller petrochemical carriers typically adjust on a monthly basis, but the length of the conflict could substantially influence them as well.

Source: IndexBox Market Intelligence Platform