Europe's Jet Fuel Supply Threatened by Middle East Disruption

Kpler data show that in April 2024 no jet fuel was loaded from the Middle East for Europe, eliminating a source that previously supplied about 60 % of the bloc’s imports. OECD European nations consume 1.6 million bpd of jet fuel and kerosene, while regional refineries produce about 1.1 million bpd, leaving a shortfall of at least 500,000 bpd. Prices have risen above $200 per barrel, up from a record $228 in March, raising concerns ahead of the summer travel peak.

ReutersReutersThe Middle East war and Europe’s energy dependenceAssociated Press

The war that closed the Strait of Hormuz, a chokepoint for about one-fifth of global oil flows, triggered the supply shock. European Commission President Ursula von der Leyen pledged cooperation with Persian-Gulf states on new energy projects. Ryanair CEO Michael O’Leary said fuel suppliers now see no risk of disruption through June and that his airline will use hedging to keep fares flat. Galp does not expect interruptions before the holiday season, and FGE Nexant expects higher regional output to offset lower imports.

Reuters

The International Energy Agency warned that physical jet-fuel shortages could appear by June if Europe replaces only half of its usual Middle-East supplies. Societe Generale estimates EU jet-fuel inventories covered 37 days of demand at the end of 2023 and may fall to around 30 days by year-end. Energy-aspects analysts note that refineries are adjusting crude runs to maximise output, but stocks could be drawn down later in summer if the disruption persists.

Reuters

Human-rights groups have criticized EU leaders for not increasing pressure on Israel over its regional military actions. German Chancellor Friedrich Merz and other officials stressed that sanctions on Iran will remain until its missile programme and proxy activities are resolved. These statements contrast with Ryanair’s and fuel-company assessments that the risk of a supply crunch is receding, highlighting a gap between industry optimism and broader geopolitical concerns.

Associated Press

• “The events of the past month have taught us a hard lesson,” — Ursula von der Leyen, President, European Commission

Associated Press

• “Our security is not just related, it is intrinsically linked. A threat to a merchant vessel in the Strait of Hormuz is a threat to a factory, for example, in Belgium.” — Ursula von der Leyen

Associated Press

• “We think the risk of a supply disruption is receding,” — Michael O’Leary, CEO, Ryanair

Reuters

• “the European Union is not part of the conflict, but we will be part of this solution.” — Antonio Costa, President, European Council

Associated Press

The EU will host a summit with the Gulf Cooperation Council later this year to discuss the India-Middle-East-Europe Economic Corridor and other energy-infrastructure projects. Monitoring of jet-fuel imports from alternative regions will continue as Europe records its lowest import levels in four years. Airlines are expected to adjust fares as inventory trends evolve and hedging outcomes dictate.

Associated Press