Custom Market Insights released a comprehensive market research report forecasting that the global liquefied petroleum gas (LPG) market will grow from USD 124.5 billion in 2025 to USD 182.9 billion by 2035, representing a compound annual growth rate of 3.92%.
The report identifies major players including Saudi Aramco, ExxonMobil, Shell, BP, TotalEnergies, Chevron, ConocoPhillips, Sinopec, CNPC, Indian Oil Corporation, and Bharat Petroleum as key participants shaping the sector’s trajectory. The forecast segments the market by source (refinery-based, associated gas-based, and non-associated gas-based LPG) and product type (propane, butane, and propane-butane mixtures).
The report’s release coincides with a period of downward pressure on crude oil prices. Hedge funds increased short positions in West Texas Intermediate crude to five-month highs during the week ended 16 June 2026, driven by expectations that US sanctions waivers on Iranian oil could increase global supply. The US Treasury announced temporary authorisation allowing Iranian crude to be produced, shipped, sold, and purchased in US dollars through 21 August 2026.
Why Does It Matter?
For Australian energy investors, the LPG growth forecast highlights a structural demand trend that operates independently of short-term crude price volatility. While oil futures have been under pressure due to easing Strait of Hormuz supply concerns and weak Chinese import data, the long-term LPG outlook is tied to different drivers: residential and commercial heating, cooking fuel in developing economies, petrochemical feedstock demand, and the ongoing transition away from higher-emission fuels.
LPG competes with coal, biomass, and kerosene in many emerging markets, positioning it as a cleaner-burning alternative rather than a direct proxy for crude oil sentiment. The 3.92% annual growth rate reflects expectations of continued infrastructure build-out in Asia-Pacific regions and sustained industrial demand, even as broader energy markets face near-term headwinds.
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Australian investors with exposure to global energy majors trading on the ASX; such as Shell and BP via ADRs, or domestic producers like Woodside Energy and Santos with LNG and gas liquids operations, should understand that LPG market expansion represents a multi-year structural tailwind distinct from the current crude oil positioning by hedge funds.
Demand Drivers
LPG demand is driven by three primary factors: residential and commercial use (cooking and heating), industrial and petrochemical feedstock applications, and automotive fuel in markets with established LPG vehicle infrastructure. The Asia-Pacific region accounts for the largest share of global LPG consumption, led by China, India, and Southeast Asian economies where urbanisation and clean-fuel policies continue to accelerate adoption.
China’s role is particularly significant. While recent crude import weakness has weighed on oil sentiment, China remains the world’s largest LPG importer, driven by petrochemical expansion and residential switching programs. India’s Pradhan Mantri Ujjwala Yojana scheme, which has distributed over 90 million free LPG connections to rural households since 2016, exemplifies the policy-driven demand growth underpinning long-term forecasts.
Australia exports LPG primarily as a co-product of natural gas processing and oil refining. Woodside Energy produces LPG at its North West Shelf and Pluto facilities, while Santos extracts gas liquids from its Cooper Basin and Gladstone LNG operations. However, Australia’s LPG export volumes are modest compared to Middle Eastern and US producers, meaning domestic stocks are more exposed to LNG and crude-linked gas prices than to standalone LPG market dynamics.
The current bearish sentiment in crude oil driven by the temporary US-Iran sanctions relief and hedge fund positioning reflects near-term supply concerns rather than long-term demand fundamentals. Oil traders are pricing in the possibility of additional Iranian barrels returning to the market, which could add 500,000 to 1 million barrels per day of supply if waivers are extended beyond August. That’s a separate consideration from LPG’s structural growth trajectory in non-OECD economies.
What Comes Next?
For Australian investors, the key question is how to position around a long-term LPG growth outlook while navigating near-term crude oil volatility and weak Asian demand signals.
The LPG forecast is a research projection, not a price driver. It reflects expectations about demand growth, infrastructure investment, and fuel-switching trends over the next decade. It does not change the current oil supply-demand balance or alter the factors weighing on crude prices today, including the Iran waivers, hedge fund short positioning, and soft Chinese import data.
Investors interested in LPG exposure have limited direct options on the ASX. Woodside and Santos produce LPG as part of broader gas operations, but their share prices are more sensitive to LNG spot prices, oil-linked contract terms, and broader energy sector sentiment than to standalone LPG forecasts.
The near-term crude oil environment remains uncertain. The US sanctions waivers on Iranian oil expire on 21 August 2026, and any decision to extend or revoke them will directly influence oil supply expectations and hedge fund positioning.
The practical takeaway: long-term LPG growth is structurally sound, driven by clean-fuel adoption and Asian urbanisation, but it’s not a reason to expect energy stock rallies in the next few months. Near-term performance will depend on crude oil supply dynamics, Chinese demand data, and whether the current hedge fund short positioning unwinds or intensifies.
