LONDON, April 28 (Reuters) - Europe’s imports of jet fuel loaded from the Middle East in April are set to dry up due to the Iran war disrupting Middle East supplies, data shows, raising concern of a supply crunch before the peak summer travel season.
European countries that are part of the Organization for Economic Co-operation and Development grouping of industrialized nations consume about 1.6 million barrels per day (bpd) of jet fuel and kerosene, while regional refineries produce only around 1.1 million bpd, leaving a shortfall of at least 500,000 bpd that imports must cover.
Last year, nearly 60 per cent of OECD Europe’s jet fuel imports from outside regions came from the Middle East, according to Kpler data, leaving Europe highly exposed to disruptions linked to the conflict and the closure of key shipping routes.
European airlines have warned about the impact of high jet fuel prices, though they generally have played down fears of an imminent shortage. Budget airline Wizz’s CEO said he did not see jet fuel shortages on Monday, echoing comments from British Airways last week.
Portuguese refiner and dominant jet fuel supplier Galp also said it did not expect supply disruptions ahead of the holiday travel season.
Sweden’s energy minister, however, warned on Tuesday that while the country now had a good supply of jet fuel, there could be a shortage further ahead.
Energy consultancy FGE NexantECA said it did not expect a jet fuel shortage in the second quarter as lower imports can be offset by regional factors such as higher output.
Here are five graphics showing the state of jet fuel supply in Europe.
The International Energy Agency warned earlier this month that Europe could start seeing physical shortages of jet fuel by June if the region is only able to replace half of the fuel supplies it normally gets from the Middle East. No jet fuel headed for Europe has been loaded in April from the Middle East, Kpler data shows.
Europe is importing more jet fuel from other regions, but imports are still set to hit their lowest in four years this month.
Jet fuel prices in Europe have once again risen over US$200 a barrel after having come off record highs of US$228 a barrel in March. Jet fuel’s gains have outpaced the rally in crude oil futures LCOc1 due to the war, which have reached a four-year high near US$120 and are below a record high of US$147 hit in 2008.
Societe Generale in a report forecast that European Union jet fuel inventories, in terms of the number of days of demand they could meet, were already tight at the end of last year with forward cover at just 37 days, and are likely to move closer to 30 days of demand cover by the end of the year.
Energy Aspects said European refineries were tweaking their processing rates to maximize jet fuel and diesel output, although they said stocks could be drawn down later in the summer if the disruption persists.
Reporting by Robert Harvey, Seher Dareen and Ahmad Ghaddar, additional reporting by Adam JourdanEditing by Alex Lawler and Tomasz Janowski
