Europe Braces for Q4 Jet Fuel Deficit as South Korea Emerges as Key Supplier
Europe faces a fourth-quarter jet fuel deficit of 510,000 bpd even as South Korea ramps up exports to a four-year high.
Europe is heading into the fourth quarter with a jet fuel supply deficit, even as it draws on distant suppliers such as South Korea, which is on track to lift its jet exports to Europe to a four-year high in September.
Consultancy Energy Aspects forecasts a fourth-quarter shortfall of 510,000 barrels per day for Europe, against surpluses of 18,000 bpd in the United States and 419,000 bpd in Asia-Pacific. The third-quarter picture is broadly similar.
The continent has leaned more heavily on imports from Nigeria, the United States and Canada since the outbreak of the Iran war more than half a year ago, which disrupted Middle Eastern supplies and cut off roughly half of Europe's jet imports. Europe remains exposed to further supply disruption as Middle Eastern tensions persist.
South Korea has become the latest large source of jet fuel shipments to Europe. European imports from the Asian nation so far in September stand at about 129,000 barrels per day, the highest since October 2022, according to commodities intelligence firm Kpler. LSEG data shows similar volumes.
With Europe expected to remain short of jet fuel, imports are set to continue, said James Noel-Beswick, head of commodities at market intelligence firm Sparta Commodities. The widening spread between Asian and European benchmarks is making it more profitable to export barrels into Europe, he added.
Jet fuel is one of the so-called middle distillates, which also include diesel and gas oil. European diesel hit a record high this week, firmer than Asia's diesel markets.
The rise in South Korean imports coincides with low inventories. Stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) oil refining and storage hub fell to their lowest in seven years in the week to September 10.
Asia acts as a swing supplier of jet fuel to Europe, and traders typically turn there when they judge the arbitrage — the relative prices between the two regions — to be profitable. Average monthly exports last year were 1.5 million barrels, Kpler data showed.
South Korea's jet fuel output for July hit a seven-year high of almost 13.89 million barrels, while exports reached a three-and-a-half-year high, government data showed. Higher refinery crude processing rates contributed to the increase, and traders expect crude runs for August to be firmer than July. Provisional government data showed July refining runs at 2.7 million barrels per day, up 16% from June.