Global jet benchmarks spike, break records on Middle East supply crunch

Elevated global jet fuel benchmarks broke records while outpacing increases in other refined product prices as shipments from the Middle East stall since the US war with Iran started on Feb. 28, and buyers scramble for alternative supply.

Jet CIF NWE differentials broke three all-time records on March 3, 4 and 5, where it priced at a $350/metric ton premium to the March ICE low sulfur gasoil futures contract.

The differential was assessed at $320.50/mt on March 6, when the outright price rose to an all-time high of $1,476.50/mt, eclipsing the previous record set in June 2022, when the Russia-Ukraine war disrupted global supply.

"If shipments through the Strait of Hormuz are not flowing, then the rest of the world has to come to the rescue," a US jet trader said March 6.

The Middle East Gulf accounted for over half of jet imports to Northwest Europe and the Mediterranean last year, up from 57% in 2024, according to data from S&P Global Commodities at Sea. That is up from 39% since 2022, driven by the decline of imports coming from the Red Sea and East Asia, the data showed

"Diesel and gasoline have more storage options," the first US jet trader said March 6.

The physical regrade, the spread taken between the jet barge vs Brent crack and diesel barge crack, widened to its steepest premium on record for jet on March 5, where it was assessed at $41.11/mt, indicating prompt demand could be outstripping available supply.

Traders noted last week, limited sell-side liquidity for Europe-bound cargoes due to higher freight costs and insurance premiums.

The strong effect on jet comes on the back of a heavy reliance on imports from the Middle East and a narrowing of Europe's supply diversification over the past four years.

The jet CIF NWE assessment fell to $1,426.75/mt on March 9, down by $16.25/mt from March 6, but remained elevated by $618/mt since Feb. 27, the last session before war broke out. The previous all-time high was set on June 15, 2022, at $1,451.50/mt.

Asia imports squeezed

While strength in the European jet fuel complex initially supported its Eastern counterpart, Asian jet fuel prices took the lead amid heightened regional supply concerns following a halt in exports from China, rallying to all-time high levels on March 4.

Platts, part of S&P Global Energy, assessed the balance-month March and front-month April FOB Singapore swap regrade spreads, which measure the value of jet fuel over 10 ppm sulfur gasoil, at plus $85.00/barrel and plus $70.00/b, respectively, at the March 4 Asian close.

This pushed the benchmark FOB Singapore jet fuel/kerosene outright price to a new all-time high at $231.42/b on March 4, overtaking the CIF NWE jet fuel cargo price at $159.66/b.

Before the US launched large-scale airstrikes on Iran on Feb. 28, the record high for the FOB Singapore front-month regrade swap stood at plus $3.19/b on Oct. 18, 2011.

China, a major jet fuel supplier, has suspended issuance of export permission certificates for refined oil products since March 4.

Prior to the war, industry sources estimated jet fuel exports would reach 2.3 million-2.4 million mt in March, slightly up from 2.26 million mt in February.

However, the expected prompt resupply has recently added downward pressure. Attractive Asian jet fuel prices in the week ended March 6 have pulled some cargoes originally headed for the West back to the East, two regional market participants said.

At the March 9 Asian close, Platts assessed the FOB Singapore jet fuel/kerosene cash differential at plus $10.28/b, easing from a peak of plus $21.16/b on March 5.

Backwardation also narrowed as the Platts-assessed balance-month March/April FOB Singapore jet fuel/kerosene swaps time spread narrowed $6.75/b day over day to plus $9.00/b on March 9.

US exports jump

Spot prices for the US jet benchmark -- Gulf Coast pipeline jet -- rose by 18.3% to $4.1243/gallon on March 5, the highest since June 2022 records after Russia's invasion of Ukraine, as export demand to Europe grew.

"I've heard a few cargoes moving out this week into next," a second US jet trader said March 9.

Shipping rates from the USGC rose to all-time highs on March 6, pressuring the export arbitrage.

The USGC to Northwest Europe medium-range tanker rate fell to $89.52/mt, down by $1.12 day over day but elevated by $29.24/mt since Feb. 27. Similar voyages to the Mediterranean were assessed $1.22 lower at $97.48/mt, which is up by $26.86/mt over the last six sessions.

"I would think the freight closes the arbitrage," a third US jet trader said March 9.

The jet price at the US Gulf Coast, where most exports are loaded, flipped to a rare premium over the price of jet in New York Harbor on March 9, despite domestic shipping costs from refineries in Texas and Louisiana, indicating international demand is eclipsing domestic needs.

USGC jet was estimated at a 4.75-cent/gal premium to US Atlantic Coast Buckeye Pipeline in New York Harbor on March 9. The same spread was measured at plus 1 cent/gal on March 5, marking the first premium to the East Coast price since Feb. 24, 2023.

Additionally, the USGC grade in the amount of 75,000 barrels was seen traded at a 15-cent/gal premium in the Platts Market on Close assessment process on March 9, accounting for all the volume traded during Cycle 16. That is the lowest single-cycle trade volume for the USGC benchmark since the 8th cycle in 2023, when only 50,000 barrels were traded, indicating limited domestic demand for barrels scheduled to ship to New York Harbor.

Platts assessed USGC waterborne jet premiums unchanged at the pipeline price plus 6 cents/gal on March 9 for both domestic A-grade and international specification A1-grade. Both are up by 3 cents/gal since Feb. 27.

A US jet trader last week said Africa's largest refinery, Nigeria's 650,000-b/d Dangote complex, which had only recently returned from maintenance in February, could be a potential relief to global supply once rates rebound.

Separately, jet prices at the US West Coast are drawing support from increased competition for imports with Asian buyers amid elevated Singapore prices and declining refinery output in California.

"I'm hearing boats are turning around and heading back to Asia," a US jet trader said March 5.

Platts assessed the US jet fuel benchmark USGC Colonial Pipeline at NYMEX April ULSD plus 15.00 cents/gal on March 9. The outright price fell to $3.7366/gal, down by 38.77 cents/gal since a 44-month high on March 5 but remained elevated by $1.3506/gal since Feb. 27.