LPG Prices to Japan Fall Over 20% as Third Tanker Clears Hormuz
Saudi Aramco cut propane 24% and butane 27% for July, easing the West Asia supply premium that has hung over Asian buyers since February.
Saudi Aramco lowered its July propane price by 24% to $580 a ton and butane by 27% to $600 a ton, Japan NRG reported on July 10 (2026-07-10), after a third oil tanker cleared the Strait of Hormuz and LPG prices for July shipments to Japan fell more than 20%.7
The move matters because it prices in a physical de-escalation traders had begun to doubt would arrive. Through the spring, tankers were still avoiding the world's most important oil chokepoint, and the premium sat in every Asian import barrel. Aramco's contract cuts are the clearest sign yet that Gulf loadings are normalising for the buyers most exposed to them.7,2
The Strait of Hormuz carried an average of 21 million barrels a day of oil in 2022, about 21% of global petroleum liquids consumption, according to EIA data.2 When it closed during the West Asia conflict that began in late February, roughly 100 million barrels of oil were removed from global supply for every week of disruption, on industry estimates cited by India Seatrade News.1
Saudi Aramco chief executive Amin Nasser said the market had already absorbed a shortfall of nearly 1 billion barrels of crude since the conflict began.1 To limit the damage, Aramco moved to route more than 5 million barrels a day through Red Sea terminals and its East-West pipeline, whose 5-million-barrel capacity was temporarily lifted to 7 million in 2019.1,2
That workaround is now easing as the strait itself reopens. About 10 million barrels of Saudi crude cleared Hormuz in early July (2026-07-02), with supertankers loading again at Ras Tanura, Oilprice reported.5 Saudi Arabia has since cut its main crude prices to Asia, responding to an interim US-Iran peace deal that allowed shipping to resume, according to Cryptobriefing.6
For Japanese and Korean buyers, the LPG cut lands on a comfortable inventory position. LNG stocks at 10 Japanese power utilities stood at 2.33 Mt as of July 5 (2026-07-05), up 16.5% on the week, up 32.4% from end-July 2025, and 14.2% above the five-year average, Japan NRG reported.7 That buffer gives importers room to wait rather than chase cargoes.
The relief flows through to crude. Brent crude front-month traded at $79.41 on Monday (2026-07-13), off the highs seen when the war premium peaked.7 The Economist noted Brent had jumped 15% from February 27 (2026-02-27) to $84 a barrel as blockade fears took hold.3 Dubai crude, the marker most relevant to Asian refiners, sat at $69.23.5
Japan NRG flagged a separate structural shift alongside the reopening: a new Mexican LNG supply route, sourced from Texas and New Mexico gas and liquefied on Mexico's Pacific coast, offers Asian buyers a shorter crossing than the Panama Canal, cutting shipping times and cost.7 During the closure, container ships across the Indian subcontinent had faced congestion and Panama Canal waiting times lengthened as vessels rerouted, the Economist reported.4
The risk is that the reopening proves partial. Traders had expected the original disruption to last days, not weeks, and were wrong, the Economist reported.3 The same complacency could cut the other way if the interim US-Iran deal frays. JPMorgan estimated in March (2026-03-03) that Iraq and Kuwait had roughly three and 14 days respectively before hitting storage limits and shutting in nearly 5 million barrels a day of Hormuz-dependent exports.3 Restarting that shut-in capacity is not instant.
There is a second variable the price cuts do not settle. When a diplomatic event pulls a supply-risk premium out of the market, OPEC+ production signalling can amplify the move beyond what the physical flows alone justify.6 Aramco's decision to cut Asian prices is a commercial read on demand as much as a de-escalation trade, and the group's next output guidance will show which one dominates.
For now the direction is clear enough. Propane and butane cargoes to Japan are cheaper, the strait is loading, and utility inventories are full.7 The next signal is whether Gulf loadings hold at pre-conflict volumes through the rest of July, or whether the reopening stalls and the premium creeps back into Dubai and JKM.1,5