Jet fuel alarm in Europe: Stocks at 7-year low, new price wave imminent

The pressure that began with diesel prices in the European energy market has spilled over into jet fuel as the final quarter of the year approaches. Low stocks of refined products, supply losses originating from the Middle East, and the need to source alternative supplies from more distant markets are increasing the risk of a new price wave in aviation fuel.

According to Energy Aspects forecasts, Europe could face a daily jet fuel deficit of 510 thousand barrels in the fourth quarter. During the same period, a daily surplus of 18 thousand barrels is expected in the US, and 419 thousand barrels in the Asia-Pacific region. This picture indicates that Europe is turning to more costly and competitive supply searches in the global market to cover its deficit.

One of the most visible indicators of the crunch has been the sharp decline in stocks. Jet fuel stocks at the Amsterdam-Rotterdam-Antwerp (ARA) oil and storage hub fell to 454 thousand tons in the week ending September 10, reaching their lowest level in seven years. The reduction in the flow of refined products from the Middle East due to the war stands out as the primary factor narrowing Europe's supply options.

SUPPLY SEARCH SHIFTS TO DISTANT MARKETS

South Korea stands out among the countries Europe is turning to in order to cover the deficit. According to Kpler data, jet fuel shipments from South Korea to Europe reached 129 thousand barrels per day in September. This level was recorded as the highest volume seen since October 2022. South Korea's jet fuel production in July also reached a seven-year high of approximately 13.89 million barrels.

However, sending more fuel from Asia to Europe is also tightening balances in the Asia-Pacific region. The US, Canada, and Nigeria are also among Europe's alternative suppliers. According to Reuters, the Dangote refinery in Nigeria has become one of the continent's largest suppliers after the US, sending approximately 80 thousand barrels of jet fuel per day to Europe in the second quarter of 2026. It is stated that this shipment meets approximately 13 percent of the deficit in Europe.

Since jet fuel and diesel are in the same "middle distillate" group, refinery production preferences directly affect both markets. When refineries prioritize diesel production, jet fuel supply can be suppressed; conversely, the crunch in the diesel market can increase. According to Euronews, gasoline prices in the European Union have risen by approximately 29 percent and diesel prices by 40 percent since the beginning of the year.

International Energy Agency (IEA) data also points to the global dimension of the crunch in refined products. According to the agency, global refinery production in July was approximately 5 million barrels/day lower compared to the same period last year. The annual decline in jet fuel exports from the Middle East, Russia, and Asia was approximately 670 thousand barrels/day; this amount corresponds to approximately 34 percent of global jet fuel trade.

It is assessed that if the pressure on jet fuel becomes permanent, the effects will not be limited to the energy market alone. Fuel is one of the largest variable cost items for airlines. For this reason, high prices are expected to create new cost pressure on ticket prices, company profitability, and flight schedules.

News Source: 12punto