Nigeria Emerges as Top Jet Fuel Supplier to Europe
Over 330,000 metric tons of jet fuel arrived at ports in northwest Europe (NWE) last month from Nigeria’s Dangote refinery, adding to over 250,000 mt from the US, according to Vortexa shipping data.
Nigeria also supplied 108,000 mt to the Mediterranean region in July, coinciding with the peak summer travel season.
Europe has become increasingly reliant on volumes arriving from West Africa and the US Gulf Coast since disruptions in the Strait of Hormuz precluded jet fuel cargoes being imported from the Middle East.
US and Nigerian volumes have allowed Europe to successfully navigate the summer, though Jeffrey McGee – founder of Makai Marine Advisors – forecasted that overall imports will be depressed on the year.
“Although Europe is doing a decent job of partially replacing Arabian Gulf flow with US Gulf and Nigerian jet imports, overall imports should decline by 153,000 b/d, or 15%,” he said.
Increased domestic refinery output has also helped Europe avert severe supply shortages. “Refiners have done everything to keep the European aviation market afloat this summer”, McGee wrote.
Lured by the prospect of attractive margins, jet fuel production was up 29% in May year-on-year, softening the blow of a 16% reduction in imports into the continent.
This is not to say that jet fuel prices have not inflated since the beginning of the conflict in the Middle East. According to OPIS pricing data, the crack for jet barges in NWE was pegged at $78.25/barrel on Thursday, compared to $24.50/bbl at the beginning of the year.
Yet, the historical premium jet fuel had on diesel in NWE has flipped in the last few months, indicative of greater tightness in the diesel market. Over the last fortnight, the diesel crack has averaged around $10/bbl higher than the jet spread.
On the other hand, there has been very little demand destruction in the European jet fuel market relative to other products. Jet fuel demand saw just a 0.6% reduction YOY in May, according to data from Makai Marine – European road diesel and other gasoil deliveries fell by 7.6% and over 26% respectively across the same period.
With no resolution to the closure of the Strait of Hormuz likely in the short-term, Europe will continue to look to Nigeria and the US for jet supplies, especially as domestic refineries are compelled to switch to winter diesel production and complete long overdue maintenance turnarounds.
Reporting by Frederick Shaw, fshaw@opisnet.com; Editing by Jaime Llinares Taboada, jllinares@opisnet.com