Europe Lures US Jet Fuel to Replace Middle East Supplies

Transatlantic jet fuel trade is booming as Europe seeks to replace the loss of Middle East Gulf (MEG) supplies with imports from the U.S., although this isn’t likely to be enough going into the summer travel season.

Ports in Northwest Europe (NWE) are expected to receive 410,000 metric tons of jet fuel from the U.S. Gulf Coast and Atlantic Coast in April, up from zero in March and 151,000 mt in February, according to Vortexa data.

The Strait of Hormuz blockade has had a significant impact on the global jet fuel market, cutting supplies from Kuwait, Saudi Arabia and the U.A.E. Europe’s dependency on those sources has only increased this decade due to refinery closures and air traffic growth.

As a result, the jet fuel crack in NWE surged to an average of $96.29/barrel in March from $28.77/bbl in February, according to OPIS spot pricing data.

This has incentivized refiners at the other side of the Atlantic to lift jet fuel production. The U.S. Energy Information Administration (EIA) reported that the country’s jet fuel exports increased to an average of 373,000 b/d in the four weeks through to April 3, up from 271,000 b/d a year ago.

However, the International Energy Agency (IEA) estimates that the increase in U.S. exports only has the potential to offset a little over 50% of the volumes that Europe usually receives from the MEG.

Indeed, Vortexa data shows that total jet fuel arrivals into NWE are expected to fall to 827,000 mt in April from 1.45 million mt in March, even despite the increase in U.S. volumes and the proximity of the summer travel season.

The IEA warned this week that, if European markets are unable to secure more than 50% of their lost MEG volumes, jet fuel stocks will fall to just 23 days of forward demand cover by June.

“This means that … physical shortages may emerge at select airports, resulting in flight cancellations and demand destruction,” the Paris-based organization said.

Reporting by Jaime Llinares Taboada, jllinares@opisnet.com; Editing by Rob Sheridan, rsheridan@opisnet.com