NEW YORK - Railway exports of liquefied petroleum gases (LPG) from the Canadian production hub of Edmonton, Alberta, to refining and trading centers in the US are unusually high this summer owing to strong demand from motor fuel blenders, according to storage broker The Tank Tiger.

The out-of-season surge in LPG flows highlights the knock-on effects of the Iran war on energy supply chains around the world, and how some government initiatives to shield consumers from the resulting price shocks have flipped long-standing trading dynamics.

LPG demand in the US typically declines in summer as propane is no longer used for space heating, and as tighter restrictions on gasoline quality - designed to reduce smog-linked emissions - reduce the amount of butane added to motor fuel.

The US government this year eased blending restrictions after its war against Iran sent prices surging at the pumps, allowing fuelmakers to continue adding high amounts of butane into gasoline.

The waivers have helped keep rail exports of LPG from Edmonton to the US above 2025 and 2024 levels, said The Tank Tiger COO Steven Barsamian.

Some 5.2-million barrels of LPG were exported by rail from Edmonton in May, up from about 3.6-million barrels in the same period last year, according to data compiled by The Tank Tiger and rail analytics firm RailState.

Weekly exports peaked in the first week of June at about 1.4-million barrels, about 400 000 barrels higher than last year's peak during that time, the data showed.

While the data does not show the specific product loaded onto LPG railcars, market participants say the bulk of the arrivals are butane due to higher blending demand this year, Barsamian said. Most of the imports likely headed to Mont Belvieu, Texas, the key US LPG storage hub and pricing benchmark for the Americas, he added.

The US is the world's largest butane exporter but has imported growing amounts of the blending component from Canada in recent years, mainly for refiners in the Midwest, Northeast and West Coast markets. Total US butane imports averaged 51 000 barrels per day (bpd) last year, all of which was supplied by Canada, according to US Energy Information Administration data.

The waivers of summertime fuel specifications have likely generated around 50 000 to 100 000 bpd of additional butane demand in the US, said brokerage StoneX energy market director Alex Hodes.

"Blending dynamics have been turned on their head," Hodes said.

The price spread for butane between Edmonton and Mont Belvieu is near a historical high, with prices at the Texas hub at around $1 a gallon, a premium of about 30c to Edmonton, making it attractive for traders to sell higher volumes to the US, Hodes added.