Saudi Aramco Slashes Propane and Butane Prices for March

By Nathan Abbington

Cover Image Attribute: Shutterstock.com

On February 27, 2025, Saudi Aramco, the state-owned oil giant of Saudi Arabia, announced a reduction in the official selling prices (OSPs) for propane and butane for the month of March. The decision, revealed in an official statement, sets the price of propane at $615 per metric ton and butane at $605 per metric ton. This marks a notable decrease from the previous month, with propane dropping by $10 per ton and butane by $15 per ton compared to February’s figures. The price cuts come as part of Aramco’s monthly adjustments to its liquefied petroleum gas (LPG) prices, which serve as a critical benchmark for contracts supplying the product from the Middle East to the Asia-Pacific region. These reductions, reflecting shifting global supply and demand dynamics, are expected to have significant implications for both producers and consumers across multiple markets, leading to changes in profit margins, consumer prices, and market share.
Propane and butane, both classified as liquefied petroleum gases, are widely used for a variety of purposes, including home heating, vehicle fuel, and as feedstocks in the petrochemical industry. The two gases, while similar, have distinct boiling points that make them suitable for different applications. Aramco’s OSPs are closely watched by the energy sector because they influence pricing trends not only in Asia but also in other regions indirectly tied to Middle Eastern supply chains. The March price cuts follow a pattern of adjustments seen in recent months, with the company responding to market conditions that have included fluctuations in global LPG supply and seasonal shifts in demand.
The reduction in propane and butane prices for March is largely attributed to an oversupply of LPG in the global market, coupled with weaker demand in key consuming regions. Traders have pointed to increased production from non-OPEC countries and a mild winter in parts of Asia as factors contributing to the surplus. In the Asia-Pacific region, where Aramco’s LPG exports are a significant market driver, demand for propane has softened due to lower-than-expected heating needs. Meanwhile, butane, often used as an alternative feedstock to naphtha in petrochemical plants, has seen stable but unspectacular demand, further pressuring prices downward. These conditions, along with the company's strategy to maintain market share in the face of growing competition from other LPG exporters, have created a buyer’s market, prompting Aramco to lower its OSPs to remain competitive.
Saudi Aramco’s pricing decisions are not made in isolation. The company’s adjustments often align with broader trends in the energy sector, including crude oil prices and production levels set by the Organization of the Petroleum Exporting Countries (OPEC). Earlier this year, Saudi Arabia maintained its voluntary crude oil production cuts, a move aimed at stabilizing global oil markets. While LPG prices are not directly tied to crude oil, the interplay between the two markets can influence Aramco’s strategy. Analysts suggest that the latest cuts in propane and butane prices may also reflect an effort to maintain market share in the face of growing competition from other LPG exporters, such as Qatar and the United States.
The impact of the price reductions will be felt across multiple industries. In Asia, where countries like Japan, South Korea, and China rely heavily on imported LPG, the lower prices could provide relief to industrial users and households alike. For example, propane is a key fuel for residential heating in rural areas, while butane is widely used in portable stoves and as an automotive fuel. Petrochemical companies, which convert LPG into products like plastics and fertilizers, may also benefit from the reduced feedstock costs. However, the flip side is that producers in the Middle East and beyond could see thinner profit margins as prices decline, particularly if supply continues to outpace demand.
Historically, Aramco’s LPG price adjustments have varied depending on market conditions. In March 2023, for instance, the company cut propane prices by $70 to $720 per ton and butane by $50 to $740 per ton, responding to a similar glut in supply and weakened demand. By contrast, in March 2021, prices rose slightly as the global economy recovered from pandemic-related slowdowns. The current cuts, while modest compared to some past adjustments, underscore the volatility of the LPG market and Aramco’s role as a price setter within it. Looking ahead, traders anticipate that prices could stabilize or even rebound in April if seasonal demand picks up or if supply is curtailed. However, this is contingent on various factors such as geopolitical events, production levels, and market demand.
At present, the March 2025 price reductions reflect Saudi Aramco's careful strategy as it manages the challenges of the global energy market. The reductions are expected to ripple through supply chains, influencing everything from shipping rates to consumer prices in importing countries. As the world’s largest oil producer, Aramco’s decisions carry significant weight, and its latest move reinforces its position as a key player in the LPG market. Whether these lower prices will hold or shift in the coming months remains to be seen, but for the moment, they offer a snapshot of the delicate balance between supply, demand, and geopolitical strategy in the energy sector.

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