Saudi Aramco and Algeria's Sonatrach set June LPG prices in opposite directions, exposing a widening gap between Asian and Mediterranean supply dynamics.
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Saudi Aramco lifts LPG prices 3% as Sonatrach slashes 31%
Saudi Aramco and Algeria's Sonatrach set June LPG prices in opposite directions, exposing a widening gap between Asian and Mediterranean supply dynamics.
Saudi Aramco raised its June official selling prices for liquefied petroleum gas by as much as 3%, while Algeria's Sonatrach slashed prices by up to 31%, traders said Monday, reflecting diverging supply conditions across regional markets.
"The Mediterranean market is seeing higher supply, which is pressuring Sonatrach to cut prices aggressively to remain competitive," a Singapore-based LPG trader said. Aramco's smaller increase, by contrast, signals relatively tighter conditions in the Asia-Pacific market it serves.
Aramco set its June propane OSP at $760 a metric ton, up $10 from May, and butane at $820 a ton, a $20 increase. Sonatrach cut propane to $575 a ton, down $125, and butane to $610 a ton, a $270 reduction. Propane and butane are types of LPG with different boiling points, used mainly as automotive fuel, heating and petrochemical feedstock.
The pricing divergence matters because Aramco's OSPs serve as the benchmark for Middle Eastern LPG shipments to the Asia-Pacific region, while Sonatrach's prices set the floor for Mediterranean and Black Sea markets, including Turkey. A 31% cut from Sonatrach could pressure other Atlantic Basin producers to follow suit, potentially widening the price gap between the two basins and reshaping trade flows.
Mediterranean Oversupply Drives the Gap
Sonatrach's aggressive cuts — the steepest in recent months — stem from rising LPG output in the Mediterranean, where new supply has outstripped regional demand. The $270-a-ton reduction in butane alone represents the largest single-month decline in percentage terms since at least 2024, traders said. The move puts Sonatrach's butane at a $210-a-ton discount to Aramco's benchmark, compared with a roughly $80 gap in May.
The divergence has implications beyond the two producers. Indian Oil Corp. recently raised prices for 19-kilogram LPG cylinders sold to industrial clients, signaling that Asian demand remains firm enough to absorb Aramco's increase. In Brazil, Petrobras cut diesel prices by 9.6% to 3.30 reais a liter starting June 1 under a federal subsidy program, a separate move that nonetheless highlights the broader trend of government intervention in fuel markets across emerging economies.
What the Price Gap Means for Trade Flows
The widening spread between Aramco and Sonatrach prices could redirect LPG cargoes. Traders may find it profitable to ship Atlantic Basin volumes to Asia if the arbitrage window opens wide enough to cover freight costs. The last time Sonatrach cut prices by more than 20% in a single month, in mid-2023, arbitrage flows to Asia increased by roughly 15% over the following quarter, according to shipping data compiled by Vortexa.
For now, the market is watching whether other Middle Eastern producers align with Aramco's modest increase or follow Sonatrach's lead. The next pricing cycle, for July-loading cargoes, will offer the first test of whether the divergence is a one-month anomaly or the start of a structural shift in regional LPG pricing.
This article is for informational purposes only and does not constitute investment advice.
