Saudi Arabia’s state oil producer Saudi Aramco reduced its official selling prices (OSPs) for liquefied petroleum gas (LPG) for July, with cuts ranging from 24% to 27%, traders said on Wednesday. Around the same time, Algeria’s Sonatrach announced smaller reductions for July, trimming its LPG OSPs by between 2% and 10%.
In dollar terms, Saudi Aramco set its July official selling price for propane $180 per metric ton lower, taking it to $580 a ton. The company lowered its butane official selling price by $220 a ton to $600 per ton. Sonatrach’s July adjustments were smaller in magnitude: propane was cut by $57 a ton to $518 and butane was reduced by $10 a ton to $600, traders said.
LPG comprises fuels such as propane and butane, which differ in their boiling points. The product mix serves a variety of end uses: LPG is used primarily as vehicle fuel, for heating, and as a feedstock in the production of other petrochemicals. Those end-use categories mean shifts in LPG reference prices feed through to sectors reliant on fuel and petrochemical feedstocks.
Official selling prices set by Saudi Aramco are used as a reference for contracts supplying LPG from the Middle East into the Asia-Pacific market. By contrast, Sonatrach’s official selling prices act as benchmarks for customers in the Mediterranean and Black Sea regions, including Turkey. Traders cited increased global supply as a factor in the July price reductions.
Context and implication
These OSP adjustments establish the reference framework for deals and contractual flows of LPG from major exporting regions into their respective trading hubs. The scale of Saudi Aramco’s reductions is notably larger in percentage terms and absolute dollar moves than Sonatrach’s, while both sets of cuts set new price signals for buyers negotiating July shipments.
Reporting note
The price figures reported above reflect the official selling prices communicated by the respective suppliers and as cited by market traders on Wednesday.