Europe is heading towards a jet fuel deficit in the fourth quarter despite turning to suppliers as far away as South Korea as the Middle East conflict continues to disrupt traditional supply routes.
Consultancy Energy Aspects expects Europe to face a jet fuel shortfall of 510,000 barrels per day in the fourth quarter, compared with projected surpluses of 18,000 barrels per day in the US and 419,000 barrels per day in Asia-Pacific.
The supply pressure has prompted Europe to increase imports from Nigeria, the US and Canada since the outbreak of the Iran war more than six months ago, which disrupted Middle Eastern supplies and cut around half of Europe’s jet fuel imports.
South Korea has now emerged as another major supplier. European imports of jet fuel from the country reached 129,000 barrels per day in September, according to commodities intelligence firm Kpler, the highest monthly level since October 2022. LSEG data showed similar volumes.
James Noel-Beswick, head of commodities at Sparta Commodities, said European imports were likely to remain strong as the continent was expected to stay short of jet fuel.
The tightening supply picture has also been reflected in inventories. Jet fuel stocks at the Amsterdam-Rotterdam-Antwerp oil refining and storage hub fell to their lowest level in seven years in the week to Sept 10.
Asia has traditionally acted as a swing supplier to Europe when price differences between the two regions make exports profitable. Kpler data showed average monthly exports to Europe stood at 1.5 million barrels last year.
South Korea’s rising exports come as its domestic jet fuel production has also increased. Government data showed July output reached almost 13.89 million barrels, the highest in seven years, while exports climbed to a 3.5-year high.
Higher refinery utilisation has supported the increase, with South Korean refineries processing 2.7 million barrels of crude per day in July, up 16% from June. Traders expect crude processing rates to remain stronger in August.
The supply squeeze is also affecting other middle distillates such as diesel and gas oil. European diesel prices reached a record high this week and traded at a premium to Asian markets, further improving the economics of shipping fuel into Europe.
