Why Saudi Aramco and Sonatrach hiked LPG prices by up to 40%
These significant increases, following earlier hikes in October, will impact heating, transport, and petrochemical costs across the Middle East and Asia.
Saudi Aramco and Algeria's Sonatrach have significantly increased their official selling prices for liquefied petroleum gas (LPG) for November, with Sonatrach's butane prices rising by up to 40%. This move will likely increase costs for households and businesses across import-dependent regions, affecting everything from cooking gas to industrial feedstock.
What happened to LPG prices
For November, Saudi Aramco raised its propane official selling price (OSP) by $40 per metric ton to $720 per ton. Its butane OSP increased by $50 per metric ton to $780 per ton (Marketscreener, Argaam, Oilandgasmiddleeast). This represented an overall increase of between 5.9% and 6.8% for Saudi Aramco's LPG products.
Algeria's Sonatrach implemented even steeper hikes. Its propane OSP for November rose by $155 per ton to $825, while butane saw a substantial $300 per ton increase, reaching $1,050 (Marketscreener, Energy.economictimes.indiatimes). Sonatrach's price adjustments for November ranged from 23% to 40%.
LPG, a mix of propane and butane, serves as fuel for vehicles, heating, and as a vital feedstock for the petrochemical industry. Saudi Aramco's OSPs are a key benchmark for supply contracts from the Middle East to Asia-Pacific, while Sonatrach's prices guide the Mediterranean and Black Sea markets (Marketscreener).
Why prices are climbing
These latest increases follow a trend seen in October, when both companies also raised their LPG prices. Saudi Aramco's propane OSP for October was $680 per tonne, a $55 increase from September, and butane was $730 per tonne, up $70 (Marketscreener, Argaam, Oilandgasmiddleeast). This meant October prices had already risen by 9% to 11% before the latest November adjustments.
Sonatrach's October propane OSP was $670 per tonne, up $110 from September, and butane was $750 per tonne, a $140 rise (Marketscreener, Energy.economictimes.indiatimes). Its October LPG prices had increased by 20% to 23%, setting a precedent for the current significant hikes.
The consistent hikes are attributed to seasonally higher demand for LPG, which typically increases as colder weather approaches in the northern hemisphere (Marketscreener). Limited global supply, alongside rising crude oil prices, has also contributed to the upward pressure on LPG costs (Marketscreener, Energy.economictimes.indiatimes). For a broader look at oil market dynamics, you can read about OPEC+ oil targets.
What it means for your money and business
The rising cost of LPG will directly affect households that rely on it for heating or cooking, leading to higher utility bills. Vehicle owners using LPG as fuel will also face increased expenses at the pump. This directly impacts household budgets and purchasing power across the region.
Businesses across importing countries in the Asia-Pacific, Mediterranean, and Black Sea regions will see their operational costs rise. Petrochemical companies, in particular, use LPG as a critical raw material for producing plastics and other chemicals, meaning these price hikes will squeeze their profit margins significantly (Marketscreener). This could ultimately lead to higher prices for finished goods.
For countries heavily dependent on LPG imports, these increases will translate into higher national import bills, potentially straining government budgets and contributing to broader inflationary pressures. The impact on consumer fuel costs is a recurring regional concern, as seen in decisions like Egypt's fuel price freeze to mitigate cost-of-living increases.
What to watch next
LPG official selling prices are typically reviewed and adjusted monthly. Therefore, market participants will be closely watching for December's announcements from Saudi Aramco and Sonatrach to gauge whether demand and supply dynamics continue to push prices higher or if any relief is in sight. Global oil price movements will also remain a key factor influencing LPG pricing.
The bottom line
The significant hikes in November LPG prices by Saudi Aramco and Sonatrach underscore tighter global supply and strong seasonal demand. This will translate into higher costs for consumers and businesses alike, with import-reliant economies in the Middle East and beyond feeling the pinch on their budgets and industrial margins.
This article is for information only and is not financial advice.