Huatai Futures: Middle Eastern geopolitical tensions are causing LPG supply to tighten, leading to a strong price increase

The current Middle East geopolitical situation remains tense, with the number of LPG ships passing through the Strait of Hormuz staying at a low level (possibly some ships have turned off AIS signals while passing through the strait), and the extent of attacks on energy infrastructure in the Middle East (oil and gas fields, refineries, terminals, storage tanks) continues to expand. Among them, the South Pars gas field in Iran was attacked on the 18th, and some production facilities have been shut down. As Iran’s largest LPG production area, damage to the gas field will directly tighten supply. International LPG prices continue to stay strong, with import costs rising steadily, and PG prices have surged significantly driven by the international market. As an energy commodity that previously showed relatively flat performance, PG’s elasticity has markedly increased. Additionally, March warehouse receipts will be concentrated on cancellation, significantly reducing the pressure from warehouse receipts, but market volatility may intensify after entering the absolute high level. (Huatai Futures)