Middle East LPG exports hit record high in March, but India’s retreating appetite to pose headwinds
Increased Middle East LPG export availability in the coming months could collide with lower subsidies for residential LPG usage in India after the government opted to slash its budget in the aftermath of federal elections
Middle East LPG (excluding Iran) exports hit an all-time high of 1.49 mbd in March according to Vortexa data, up by nearly 200 kbd y-o-y, ahead of the expected start of OPEC+’s unwinding of its crude production cuts in April. The increases were led by UAE (+132 kb/d m-o-m) and non-OPEC member Qatar (+62 kbd m-o-m)
We had previously estimated the resulting impact of the unwound cuts on regional LPG sendout would be minimal–an additional VLGC per month from April onwards–and expect that April exports might struggle to match the highwater mark set in March.
For one, the seasonal demand slump in April is likely to quell overall import appetite; our conversations with buyers indicate that H1 April requirements were quite thin. The second half may only fare slightly better given several major players will only return to their desks later this week after their Ramadan breaks and face a narrow window in which to peg down fixtures. Additionally, Saudi Aramco’s April LPG programme looked tighter, given the cut in tolerances to two of its major buyers.
Conversely, the sequential uptick from UAE likely came from the increased utilisation of its Al-Hosn gas plant, while Qatar will likely be keen to keep up the competition with UAE for market share to the Far East.
Lack of LPG subsidy in India from April to quell import appetite
Headwinds to increased sendout by the Middle East could well come from its largest buyer, India. The nation received 59% of the region’s exports in Q1 2025, up from 57% on average last year and 52% in 2023, according to Vortexa data. Overall, India LPG demand saw a whopping uptick of 986 kbd y-o-y (+6.4%) on average in 2024, as per official Petroleum Planning and Analysis Cell (PPAC) data, compared to a 2023 growth rate of 926 kbd y-o-y (+1.5%).
It is unlikely that the 2024 increase will be repeated this year. Federal elections in India last year saw a barrage of LPG subsidies and free cylinders being given out to voters; residential usage of LPG constitutes 92% of overall LPG consumption in India. Moreover, the government hit its target of adding 7.5 million to its Pradhan Mantri Ujjwala Yojana (PMUY) subsidy scheme several months ahead of schedule last year.
Subsidies for residential cylinders are crucial to supporting LPG consumption growth in the country. India’s 2025-26 budget, which kicks in this month (April), will see a reduction of these subsidies to low-income households by 36 billion rupees ($421 million, or 28%) and to overall households by 26 billion rupees ($304 million or 18%).
State-owned oil companies have been caught between a rock and a hard place with subsidies, effectively having to sell the product well below international prices, resulting in cumulative net losses of about $4.7 billion, according to India’s budget data for the 2024 fiscal year.
Without a federal election in sight for the next five years, it will be up to the individual states to provide some sort of relief to its constituents, although this is expected to be nowhere near the more extensive compensation provided under the federal scheme. Indeed, the southern state of Andhra Pradesh has already voted to provide a free LPG cylinder every four months, beginning in November 2024. That said, while monthly residential cylinder prices have remained unchanged since March 2024, we find it difficult to see how this dynamic could persist given the reduction in residential subsidies.
Ultimately, while the Middle East will continue to prioritise exports to India, slowing demand growth from that country could well see regional suppliers diversifying their sendout into Northeast and Southeast Asia.
