An acute shortage of liquefied petroleum gas (LPG) has sent domestic prices soaring, with 12kg cylinders trading at a BDT 600 to 800 premium over government caps for nearly two weeks. Yet consumers in many areas cannot secure LPG even when paying this premium.

One faction of LPG operators blames recent U.S. sanctions on several foreign trading firms and vessels supplying the region, which they say has triggered a critical shortage of transport ships. These sanctions have effectively idled the very companies and vessels that previously supplied LPG on a large scale to Bangladesh and South Asia.

Another segment of the trade disputes this narrative. They contend that several major firms abruptly halted imports, creating an artificial scarcity. This, they argue, is why customers cannot buy LPG even at double the official rate. A separate group claims applications to the government for increased import permits have been denied.

IMPORT ROUTES DISRUPTED, DEFICIT WIDENS

Monthly sales plummeted from an average of 120,000 tonnes to just 85,000 in December, leaving a 30,000-tonne deficit that operators insist is a supply shock rather than a drop in demand.

Operators note that the U.S. imposed extensive sanctions on LPG-carrying vessels, individuals, and firms within the sector last November. Since then, these entities have been unable to supply to South Asia. While import pressures began in December, their direct impact is now being felt acutely in the domestic market.

Senior figures from the LPG Operators Association of Bangladesh (LOAB) acknowledge winter typically brings higher demand. This seasonal pressure, compounded by the import halt from several companies, has intensified the crisis. They warn the situation could deteriorate further without a swift normalisation of imports and supply.

Asked if U.S. sanctions on foreign suppliers, individuals, and ships were affecting the market, LOAB President and Delta LP Gas Managing Director Mohammed Amirul Haque dismissed the link. “It is incorrect to say the LPG crisis is due to U.S. sanctions,” he told Bonik Barta. “There is always a slight shortage in winter. But another reason is that five major companies, including Beximco and Bashundhara, are not importing LPG now.” He explained the gap left by their absence requires others to increase imports, which is not happening.

“To resolve this crisis, we (Delta LP Gas) and four other companies applied to the ministry to increase LPG imports, but no permissions were granted,” he said.

The U.S. Department of Treasury imposed sanctions on November 20, targeting 48 individuals, firms, and fuel-carrying vessels. Its list includes 14 Singaporean, Iranian, and Indian traders, 24 entities, and 10 ships transporting LPG and crude oil.

Several sources said a large portion of those sanctioned are based in Iran and the United Arab Emirates, with long-standing roles supplying LPG and fuel oil to South Asia. These business networks are now effectively paralysed by the restrictions — an impact felt in import-dependent markets like Bangladesh.

Operators confirm that while Bangladesh does not import LPG directly from Iran, a significant volume of Iranian-produced gas previously arrived via foreign traders using altered documentation and routes. Wary of financial and regulatory repercussions under U.S. sanctions, operators are now shunning traditional supply channels, effectively severing long-established routes.

Reliable sources indicate approximately 50,000 tonnes of LPG supplied to the domestic market are imported through India’s Dhamra port in Odisha. A further 20,000 tonnes comes via a foreign firm operating in Bangladesh under a joint venture. The remaining 50,000 tonnes traditionally arrived from Iran and other nations through intermediary sources. Sanctions have halted this major segment, causing the current deficit.

Sector analysts report global suppliers of Iranian LPG are now in a severe crisis. Many firms have already withdrawn from that market. Supply to Bangladesh will therefore not normalise until alternative supply is established.

Abu Saeed Raja, chief marketing officer for Fresh LP Gas, told Bonik Barta, “The primary reason for this sudden LPG crisis is the U.S. sanctions on foreign individuals and firms in this sector’s transport chain, alongside restrictions on several vessels. Consequently, even those who placed import orders three months ago are facing difficulties.”

He noted his firm’s imports are now 30 percent below its sales volume, adding, “A crisis is inevitable if supply cannot meet demand. When imports fall, creating a shortage to sell at higher retail prices becomes the natural outcome.”

PRICE GOUGING HITS CONSUMERS AND BUSINESSES

LPG is primarily a blend of butane and propane. Global prices for both components had been falling from January through October last year, before beginning to climb in November. That month saw butane trading at $460 per tonne and propane at $475, down from $490 and $520 respectively the previous month. Prices have since spiked, reaching $520 for butane and $525 for propane this January.

As LPG is imported, its domestic price is pegged to the Saudi Aramco CP benchmark. The Bangladesh Energy Regulatory Commission (BERC) is set to announce a new price today. Reliable sources indicate the price will increase in the upcoming announcement. Back in December, BERC set the price for a 12kg cylinder at BDT 1,253.

The market’s abrupt shortage has created fertile ground for price gouging. The 12kg cylinder, most common for household cooking, is now virtually unavailable even at BDT 2,000, far above its official rate. Distressed consumers report that retail prices have escalated daily over the past week, as the lack of official intervention enables profiteers.

Traders note the current supply is inadequate for winter, which typically sees demand rising. This gross imbalance is being exploited at the retail level. Artificially inflated prices are inflicting severe hardship on end-users.

“My restaurant needs three cylinders daily,” said Abdul Kuddus Ali, owner of Shuvo Restaurant. “The price was BDT 1,500 on Thursday, but today it is BDT 1,700. We get a slight discount for bulk purchase. But retail and residential customers are paying over BDT 2,000.”

Investigations in Dhaka and other major markets reveal even sellers cannot secure enough cylinders to meet demand, leaving both households and businesses stranded. Zakir Hossain, proprietor of Allah’r Daan Hardware & Store in Karwan Bazaar, told Bonik Barta, “My shop has had no cylinders for five days. The dealer claims there’s no gas, yet I see stacks inside. I sell Petromax, I-Gas, and Basundhara brands. The price was BDT 1,250 a week ago, but for the last three days we’ve had to charge BDT 2,000. We are buying them at BDT 1,650 ourselves. There is no LPG in all of Karwan Bazaar; a syndicate is orchestrating this shortage.”

Private firms meet roughly 98 percent of national LPG demand. Although 58 companies hold import and marketing licences, only about 28 are active. A major current supplier, Omera Petroleum Limited, reports no such supply issues. “We are hearing of a crisis in the market, but Omera-Premier LPG faces no shortage,” said CEO Tanzeem Chowdhury. “Perhaps other companies are struggling.” He claims that until the underlying supply-chain disruptions are addressed, the volatility in the domestic LPG market is unlikely to subside.