Demand destruction could ease pressure on Asian jet/kerosene market

Demand destruction may ease some upward pressure from tight supply in the Asian jet fuel/kerosene complex, as reflected by the recent pullback in cash differentials for Singapore-loading cargoes.

Platts, part of S&P Global Energy, assessed the FOB Singapore jet fuel/kerosene cash differential against the Mean of Platts jet fuel/kerosene assessments at a premium of $30.13/b, down $5.99/b day over day at the April 2 Asian close. Compared to a record high of $42.40/b on March 30, the cargo premium had fallen by $12.27/b, or 28.94%.

The downswing comes as rising oil costs and airspace restrictions disrupt airline operations, which pose a downside for aviation fuel demand. S&P Global Energy CERA analysts warned in a March 31 report that flight cuts and spiking jet fuel prices resulting from supply tightness would likely force lower demand, with Q2 2026 demand forecast to rise by just over 28,000 b/d year over year, reflecting a notable slowdown in growth.

"Some airlines have cut flights, and most have started to talk about price adjustments, which will only worsen as the crisis goes on. The net result will be costlier travel and fewer flights, potentially translating into reduced demand through the third quarter," the CERA analysts said in the report.

Asia's jet fuel/kerosene demand growth projection in Q2 2026 was revised down by 45,000 b/d to 62,000 b/d year over year, the analysts said.

Capacity shrinks

Global seat capacity is expected to shrink due to flight disruptions in the Middle East stemming from the ongoing war, according to a March 31 statement by the International Air Transport Association. The annual growth rate for global seat capacity in March eased to 3.3% from an earlier forecast at 5.2%.

"Current schedules indicate that global seat capacity growth will slow further to 2.7% year over year in April. The deceleration is again driven mainly by the ongoing reduction in Middle East capacity. These reductions in a major connecting hub for Asia–Europe and Africa–Asia traffic flows are expected to exert continued downward pressure on global seat growth in the near term," IATA said in the statement.

In Vietnam, the Civil Aviation Authority of Vietnam (CAAV) said March 23 that the Middle East conflict has severely restricted the supply of jet A-1 fuel, raising the risk of shortages for domestic airlines. State carrier Vietnam Airlines announced plans to suspend multiple domestic routes from April 1, canceling 23 flights per week to prioritize international services.

"The market will definitely get tighter as the situation prolongs, but we are also seeing demand destruction as we speak. Airlines are not going to be in the green buying fuel at these levels," said a Northeast Asian jet fuel trader.

In an email response to Platts' query on April 6, the spokesperson of Singapore Airlines Group, a key airline operator of Asia's aviation hub, said, "The SIA Group's latest monthly operating statistics (February 2026) indicate strong load factors across SIA's and Scoot's network. We are closely monitoring the situation in the Middle East, as well as the demand for air travel, and will adjust our capacity and network as necessary."

The group's passenger load factor stood at 85.6% in February, down slightly from 86.5% in the same month last year.

Airlines raise jet fuel surcharges

Surging jet fuel surcharge fees will likely curb consumers' appetite for air travel.

Japan Airlines and All Nippon Airways are expected to double their jet fuel surcharges for June bookings, according to local media reports.

For flight tickets bought between April and May, the jet fuel surcharges from Japan to Europe set by JAL and ANA are at Yen 29,000 and Yen 31,900, according to the airlines' websites. The surcharge for bookings between June and July will be announced in the second half of April, according to their websites, and will reflect the average Singapore jet fuel/kerosene price from February to March.

JAL and ANA didn't respond to queries from Platts on this matter.

South Korea's flagship carrier, Korean Air, has about tripled the jet fuel surcharge for nearly all routes for tickets bought in April. For example, the surcharge for medium-haul flights, such as from Incheon to Bangkok, increased from Won 39,000 to Won 123,000, according to the airline's website.

The Platts-assessed benchmark FOB Singapore jet fuel/kerosene cargo outright price averaged $195.40/b in March, compared with $89.03/b in February, $83.32/b in January and $84.33/b in December. At the April 2 Asian close, the outright price was assessed by Platts at $231.65/b, up $13.05/b day over day.