Gulf tensions leave 25 VLGCs trapped, shaking LPG carrier market

Volumes from the region are difficult to replace, with India particularly exposed, while 25 very large gas carriers (VLGCs) are currently trapped in the Gulf.

Intelligence services and data provider Anfil Gas, which specialises in the VLGC market, shared data with Riviera, indicating that operations at most key export terminals have faced periodic disruptions.

An India-flagged LPG carrier loading at Kuwait’s Mina Al Ahmadi on 1 March was forced to halt operations and leave the terminal for several hours. Meanwhile, six VLGCs loaded from 1 March onwards at Ruwais (UAE), Mina Al Ahmadi, Ras Laffan, and Mesaieed (Qatar) have been instructed to drift in the Middle East Gulf, avoiding transit through the Strait of Hormuz until further notice.

According to Anfil Gas, the only VLGC to exit the Strait was an Iranian-traded vessel on 1 March, which notably had turned off its AIS while transiting. Several Japanese owners and operators have opted to halt operations in the region, avoiding entry into the Gulf.

As of 3 March, 25 VLGCs remain trapped in the Gulf, 10 linked to Iranian trade and eight controlled by India’s three major refiners – IOC, HPCL, and BPCL. An additional 15 vessels are anchored or drifting outside the Gulf, from Fujairah/Khor Fakkan to Sohar, with a few in the Arabian Sea. Around seven of these are connected to Iranian business, while the remainder were scheduled for early March loading from Gulf terminals.

Meanwhile, the conflict has heightened concerns over potential Houthi attacks in the Red Sea, prompting limited passages from the Gulf of Aden to Yanbu (Saudi Arabia) and the Suez Canal.

Enormous market impact

Anfil Gas’ analysis for Riviera shows that the conflict’s consequences for the VLGC and broader LPG carrier market will be significant, with the duration of tensions a key variable.

Disruptions to safe passage through the Strait of Hormuz are particularly impactful. According to Drewry, nearly 40% of global LPG supply transits the passage annually.

Anfil Gas highlighted that India is most exposed, heavily dependent on Gulf cargoes, “That volume makes it practically impossible for any other exporter to replace. That makes Saudi Aramco’s recent force majeure in March seem like a walk in the park,” the report noted.

Similarly, a significant reduction in Iranian cargo flows to China could create severe shortages, especially given that US imports have been heavily reduced since April 2025, Anfil Gas added.

Pricing to spike

As oil prices surge, LPG product prices are also expected to increase sharply worldwide.

“Especially for LPG, both US and CFR Asian prices could spike if Gulf cargo flows are disrupted, potentially severely impacting residential and petrochemical buyers,” Anfil Gas highlighted.

Even if arbitrage opportunities remain open, Chinese propane dehydrogenation plants may still have to halt operations. Some relief may come from multi-cracker plants, as disruptions in naphtha shipments from the Gulf could make LPG more competitive. Meanwhile, the US Gulf Coast (USGC) FOB market could be completely drained at a time when premiums are soaring.

For freight, this could strengthen BLPG1, the Baltic Index benchmark for Gulf loadings, for those willing to take the risk to ballast toward the Gulf or Yanbu. At the same time, Westbound position lists could lengthen, as most owners prioritise the safety of the USGC.

“However, in that case, beyond the strong competition between the owners and the numerous relets that will surely arise, USGC FOB premiums would absorb the lion’s share of ARB profits, perhaps regardless of how solid the Asian cash differentials are,” Anfil Gas noted.

“The shorter the conflict, the better for the markets – and most importantly, for people. In any other scenario, the consequences could trigger serious disruption and uncharted conditions. What is certain is that the coming days will be defined by uncertainty, volatility, and nervousness unless swift, positive developments occur,” Anfil Gas concluded.