Saudi Arabia’s national oil company, Saudi Aramco, has announced significant reductions in its official selling prices (OSPs) for liquefied petroleum gas for July, cutting prices by about 24% to 27% compared with prior levels, traders said Wednesday.
Under the July price schedule, Saudi Aramco set its propane OSP $180 per metric ton lower, to $580 per ton, while butane was marked down by $220 per ton to $600. Traders pointed to broader market conditions as a contributing factor.
Algeria’s state energy firm Sonatrach also moved to lower its LPG prices for July, though by smaller margins. Sonatrach trimmed its propane OSP by $57 per ton to $518 and reduced its butane price by $10 per ton to $600, according to the same market sources.
Product definitions and primary uses
Propane and butane are both components of LPG and are distinguished primarily by their different boiling points. The fuel mix is commonly used for vehicle operations, residential and commercial heating systems, and as a feedstock in petrochemical manufacturing.
Regional benchmarks and contract references
Saudi Aramco’s official selling prices are widely used as reference points for LPG supply contracts originating in the Middle East and destined for the Asia-Pacific region. Sonatrach’s OSPs perform a similar role for markets around the Mediterranean and the Black Sea, regions that include Turkey.
Clear summary
Both major state producers have reduced LPG official selling prices for July: Saudi Aramco with larger cuts of 24%-27%, and Sonatrach with smaller reductions of 2%-10%. The moves come as traders report an increase in global supply.
Key points
- Saudi Aramco cut propane to $580 per ton and butane to $600 per ton for July.
- Sonatrach lowered propane to $518 per ton and butane to $600 per ton for July.
- Propane and butane are used for vehicle fuel, heating, and petrochemical feedstock; Aramco and Sonatrach OSPs serve as regional contract benchmarks.
Risks and uncertainties
- Market direction may remain uncertain while suppliers and buyers adjust to the increased supply cited by traders.
- Regional contract pricing could be affected as these OSPs function as references for distinct trade flows - Middle East to Asia-Pacific and Mediterranean/Black Sea markets respectively.