Europe faces jet fuel deficit as South Korea boosts exports
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| Aircraft being refueled at an airport. Illustrative image. The image is representative of the aviation fuel market. |
Europe is facing a jet fuel supply deficit in the fourth quarter as Middle East disruptions continue to reduce supplies, while South Korea has emerged as a major new supplier to the European market.
European imports of jet fuel from South Korea are running at about 129,000 barrels per day in September, according to shipping data. That is the highest monthly rate since October 2022 and is expected to push South Korean jet fuel exports to Europe to a four-year high.
Europe has increased imports from suppliers including Nigeria, the United States and Canada since the Iran war began more than six months ago. The conflict disrupted Middle Eastern supplies and cut off about half of Europe's previous jet fuel imports.
Energy consultancy Energy Aspects forecasts that Europe will face a jet fuel deficit of 510,000 barrels per day in the fourth quarter. It expects the United States and Asia-Pacific to have surpluses of 18,000 bpd and 419,000 bpd respectively, while the third quarter is showing a similar pattern.
James Noel-Beswick, head of commodities at Sparta Commodities, said European imports were likely to continue because the continent was expected to remain short of jet fuel. The price difference between European and Asian fuel markets has also made shipments to Europe more profitable for suppliers.
Jet fuel is one of the middle distillates, a group of refined petroleum products that also includes diesel and gas oil. European diesel prices reached a record high this week, increasing the pressure on regional fuel markets.
European inventories are also low. Stocks at the Amsterdam-Rotterdam-Antwerp, or ARA, refining and storage hub fell to their lowest level in seven years in the week to September 10.
Asia is an important swing supplier for Europe's jet fuel market, with traders increasing shipments when the price gap between the two regions makes exports profitable. Average monthly exports from Asia to Europe last year were about 1.5 million barrels, according to Kpler data.
South Korea has increased production as demand for its jet fuel exports has grown. Its jet fuel output reached almost 13.89 million barrels in July, the highest level in seven years, while exports reached a three-and-a-half-year high.
Higher refinery processing rates have contributed to the increase. South Korean government data showed refinery crude processing rose 16% in July from June to about 2.7 million barrels per day, while traders expect processing rates in August to be higher than in July.
Europe's reliance on distant suppliers highlights the continued pressure on its jet fuel market. Further disruption to Middle Eastern supplies could increase the region's need for imports and keep prices elevated.
