Middle East Conflict Tightens Global LPG Supply, Pressuring South American Market

Interco's commodities director warns of higher prices, logistical challenges, and greater competition for LPG cargoes in Latin America

Mar. 16, 2026 at 2:49pm

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The conflict in the Middle East is already beginning to have repercussions in the global liquefied petroleum gas (LPG) market, with impacts that may reach South America through price increases, logistical constraints, and greater competition for cargoes in the international market. Marcos Ferraz, commodities director at trading company Interco, says premiums at global hubs have surged and warns of supply challenges in countries like Argentina, Brazil, Chile, and Peru.

Why it matters

The Middle East supplies around 40% of the global LPG market, and the war has created a 20-30% deficit in supply. This is driving up prices and causing logistical issues, especially in Asia where petrochemical companies are major LPG consumers. South American countries dependent on LPG imports, particularly from the key Houston hub, are at risk of supply shortages and higher costs.

The details

The conflict has caused premiums at the Houston LPG hub to surge from $30-$35 to $150, significantly increasing import costs for countries like Brazil, Chile, and Peru. Many shipowners are also avoiding the Middle East region, creating a major logistical problem and redirecting LPG flows to the U.S. This has led to tight supply and competition for cargoes in Houston, which is now supplying much of the global market despite operational challenges like heavy fog and ship queues.

  • The conflict in the Middle East began in early 2026.

The players

Marcos Ferraz

The commodities director at the trading company Interco.

Petrobras

Brazil's state-owned oil and gas company, which supplies around 95% of the Brazilian LPG market.

EPE (Empresa de Pesquisa Energética)

Brazil's energy research company, which has projected a 3.5-3.6% increase in LPG consumption in Brazil this year, partly due to the Gás do Povo program.

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What they’re saying

“We still do not know what Petrobras' policy will be regarding price maintenance. We saw an interview with the company's president indicating that the current policy will be maintained for now and that the company will observe market volatility before deciding on any potential adjustments.”

— Marcos Ferraz, Commodities Director (BNamericas)

“About 40% of the market had been supplied by the Middle East. With the war, the blockade of the Strait of Hormuz and the stance of the shipowners, we are already seeing a deficit of between 20% and 30% of LPG in the market.”

— Marcos Ferraz, Commodities Director (BNamericas)

What’s next

Interco is closely monitoring the market situation and is in discussions to potentially supply LPG to the Peruvian market, which has been impacted by pipeline damage. The company is also focusing on expanding its presence in the African market.

The takeaway

The Middle East conflict has created significant disruptions in the global LPG market, with higher prices, logistical challenges, and increased competition for cargoes. Countries in South America that rely heavily on LPG imports, such as Brazil, Chile, and Peru, are at risk of supply shortages and higher costs, underscoring the need for greater energy security and diversification in the region.