UK Most at Risk for ‘Jet Fuel Rationing’ this Summer: Goldman Sachs
Goldman Sachs said Monday there is a considerable risk of a jet fuel shortage this summer due to the Mideast conflict, with the United Kingdom being the most exposed to possible jet supply restrictions due to its heavy reliance on imports.
The U.S. investment bank in a note forecast significant tightening in the Europe diesel market in the summer, while it said there should be more buffers for crude oil and gasoline.
Goldman’s energy and transportation equity analysts estimated that European commercial jet fuel inventories, excluding government emergency reserves, could drop below the International Energy Agency’s critical 23-day shortage threshold in June.
“The U.K. appears most at risk of jet fuel rationing given its large net imports,” it said.
In late April, German airline Lufthansa said it would cancel 20,000 flights to save on jet fuel, while other carriers including Dutch-based KLM and Scandinavian Airlines have also announced cuts to their schedules in response to high jet prices and ahead of possible supply shortages in Europe.
According to the bank’s estimates, weekly jet stocks in the key Northwest European fuel hub of Amsterdam-Rotterdam-Antwerp were quickly drawn down to around 4 million b/d in late April, which was nearly 2 million b/d less than the year-ago level.
Meanwhile, Asia-Pacific was only able to partially offset lower Mideast imports with reduced exports and higher imports from elsewhere, and the lack of crude throughout in the region is expected to reduce domestic refined product supply, the bank said.
Goldman also said global oil stocks have been rapidly falling to an eight-year low and the weakest level since 2018 when President Trump reimposed sanctions on Iran’s oil exports.
Even if oil flows through the Strait of Hormuz started to recover soon, the bank said any full normalization of deliveries would take at least several weeks.
–Reporting by Frank Tang, ftang@opisnet.com: Editing by Michael Kelly, mkelly@opisnet.com