"Each year, market outlooks are shaped by prevailing expectations at the time forecasts are finalized. Inevitably, major global shifts can dramatically alter these assumptions, reshaping the foundation of projections and forcing market participants to adjust their strategies.

As we approach 2025, the year presents heightened "Black Swan" risks compared to previous periods.

This looking ahead summary delves into those potential disruptors and their implications."

Geopolitical Factors with Effects on LPG

US Presidential Election

Undoubtedly, the newly elected U.S. government taking office at the start of the year will introduce fresh market dynamics, potentially boosting oil and gas developments. The LPG/NGL market is expected to emerge as an indirect “winner” of this political shift.

US-China Relations

A key factor directly impacting LPG markets will be U.S.-China relations, particularly the final stance of both governments on tariffs. While we see a low likelihood of tariffs on LPG, their potential imposition could create a highly disruptive scenario for both LPG and olefin markets.

Middle East Conflict

The Middle East remains highly volatile, with recent developments in Syria adding to regional instability. While limited LPG export growth is expected from the region this year, any conflict escalation could disrupt trade routes, halt production, and destabilize the LPG market—particularly if coupled with the imposition of Chinese tariffs.

Russian/Ukraine Conflict

Without a resolution in 2025, overland LPG imports into Central Europe, from Russia, will face further downward pressure, adding complexities to regional logistics. This will not only drive increased seaborne demand but could also lead to demand destruction in areas with poor logistic economics, alongside rising exports from Russian ports with uncertain destinations.

Market/Logistics Factors with Effects on LPG

Global Economic/ Demand Growth

  • The pace of the global economy will shape demand for energy products and derivatives like plastics.
  • If global ethylene and propylene demand exceeds current expectations, LPG demand will rise, positively influencing LPG prices. Conversely, lower demand will have the opposite effect.

Oil & Gas Demand

  • Global oil and gas demand will determine production levels and shape pricing dynamics and volatility.
  • Higher demand will increase LPG output, benefiting trading activity but pressuring prices due to potential oversupply, while lower-than-expected demand will have the opposite effect.

OPEC+ Decisions

  • OPEC+ decisions consistently have a decisive impact on global crude markets and, by extension, LPG markets.
  • The latest decisions has maintained production cuts at the current level through to the end of Q1 202However, these decisions remain subject to change, depending on future crude market conditions, potentially altering LPG market dynamics.
  • 5, with a phased increment planned through October 2026.

USGC LPG Terminal Constraints

  • Another significant issue for LPG markets in 2025 is the USGC terminal limitations combined with potential logistical challenges, which could cause market disruptions.
  • The start-up timing of Energy Transfer’s expansion, and to a lesser extent Targa Resources’, will heavily influence the market.
  • Energy Transfer’s terminal expansion’s LPG availability and flexibility will also be a critical factor in shaping the market in the second half of 2025.

Panama Canal Constraints

  • Although Panama Canal throughput is not currently a concern for the LPG market, a prolonged dry period could lower water draft levels early or late next year. This would limit available slots and potentially cause significant disruptions, similar to those experienced in Winter 2023-2024.

Weather Patterns

  • Weather remains a critical factor disrupting energy markets.
  • In recent years, mild conditions have minimized “black swan” events, but when extreme weather occurred, it caused severe disruptions (e.g., U.S. production or Panama Canal water levels).
  • Current forecasts predict severe cold weather in Texas in early 2025, which could significantly impact LPG markets.