High European jet fuel prices amid fears of Middle East supply disruptions prompted oil traders to ship in June the highest volumes in a year of jet fuel from South Korea and China to Europe.
These flows from Northeast Asia to Europe were estimated at a total of about 3 million barrels last month, according to trade sources and vessel-tracking firms who shared their data and insights with Reuters.
For most of last month, amid elevated concerns about supply flows due to the 12-day Israel-Iran war, the price of physical jet fuel in Northwest Europe was $60 to $80 per ton higher than the Asian prices for the fuel, per data from LSEG cited by Reuters.
As the markets feared some disruption to oil and petroleum product flows in the Middle East, jet fuel prices in Europe jumped as Europe would have been most exposed to a potential disruption, especially now with the beginning of peak summer demand for aviation fuel.
As a result of ample jet fuel supply in Northeast Asia and higher prices in Europe, major oil trading houses raced to ship jet fuel to Europe in June.
The Northeast Asia-Europe jet fuel flows “were purely opportunistic, spurred by geopolitical tensions that sent Northwest Europe cracks surging, while freight rates on modern newbuild vessels remained attractive enough to justify the move,” Kpler senior lead research analyst Zameer Yusof told Reuters.
Apart from price spikes due to the geopolitical situation, European jet fuel prices also rose as Europe is now at peak summer flight demand season, with traffic numbers rising in June from May and from June last year, too.
The rise was already evident in May, when European carriers saw a 4.1% year-on-year increase in demand, per data from the International Air Transport Association (IATA) published earlier this week.
Capacity for European carriers increased by 4.8% year-on-year in May, the IATA data showed.
Despite the surge in flows to Europe, Northeast Asian prices remain subdued due to an ample supply of jet fuel, according to analysts.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
- Iraq Claims Top Spot Among OPEC Crude Suppliers to the U.S.
- Russia’s Oil Exports Stagnate as Prices Sink and Sanctions Bite
- UK Scraps $34 Billion Morocco-Linked Subsea Power Cable Megaproject
