Due to a surge in shipping costs triggered by the Middle East conflict, some US buyers of liquefied petroleum gas (LPG) have canceled cargoes originally intended for Asia.

Informed sources indicate that at least two shipments scheduled for loading next month from US Gulf export terminals have been canceled, with some buyers also negotiating to terminate additional shipments.

The war involving Iran has led to the near-total closure of the Strait of Hormuz, cutting off LPG supplies from the Persian Gulf and forcing Asian buyers to urgently seek more supplies from the United States. The key indicator measuring the profitability of US gas exports to East Asia, the Far East Index-Mont Belvieu spread, has narrowed, while shipping costs have risen sharply, erasing traders' substantial returns.

India, a major LPG importer, sourced 90% of its supply from the Middle East before the Iran war. Following the outbreak of conflict, it turned to the US to cover part of the shortfall, but rising shipping costs have increased expenses and squeezed profit margins for the country's state-owned refiners. For Asian buyers, there are few signs of relief from this round of soaring shipping costs.

Shipping via the Panama Canal to Asia now involves either longer waiting times than before the war or paying exorbitant fees to jump the queue. An alternative is to reroute around the Cape of Good Hope, but this takes vessels longer, exacerbating tanker tightness and pushing up freight rates.

In India, LPG is widely used as cooking fuel in residential and commercial kitchens, while in China, large factories use it to produce plastics.