European jet forward curve softens on expectations of well-supplied summer

The European jet fuel forward curve has softened significantly from the all-time highs seen in the wake of the Middle East war, as the market now expects an oversupplied summer with lukewarm aviation demand.

Platts, part of S&P Global Energy, assessed the Northwest Europe jet CIF cargo financial for July at $981.75/metric ton on June 30, down from the highs of $1,694.25/mt seen on March 30, suggesting increasingly bearish sentiment for the summer.

The jet CIF NWE cargo financial for August has also dropped from the March 30 high of $1,507.50/mt to $968.25/mt on June 30.

"Jet is oversupplied because of high local refinery production -- refineries pushed back maintenance to make the most of the high prices," said a trader. "The US and [Nigerian refiner] Dangote also shipped large volumes. Now there are some flows resuming through the Suez, too, from the UAE, but let's see how it goes."

US flows of jet fuel into Europe stood at about 818,000 mt in April, the highest on record, dipping to 560,000 mt in May and 399,000 mt in June, according to S&P Global Commodities at Sea data.

Flows from Nigeria rose from 232,000 mt in May to 466,000 mt in June, the highest volume exported from the country to Europe since it became a net exporter of jet fuel in 2024, when the Dangote Refinery started producing jet fuel.

With East of Suez markets also well supplied and pricing weaker than Europe, the East-West arbitrage incentive is wide open, the same trader said. So, higher volumes of jet fuel are expected to flow west from exporters, including the Middle East and India.

While flows from the UAE and Kuwait have been absent so far in June, according to CAS data, flows from Saudi Arabia have hit about 106,000 mt, up from just 7,000 mt in May.

Flows from India were up from 129,000 mt in May to 197,000 mt in June.

Two other European jet fuel traders told Platts that they generally support the sentiment but added that everything depended on what happened next in the Strait of Hormuz and whether the vessels stuck in the Persian Gulf could all actually come through, especially as was unclear when Middle Eastern refineries would return to prewar production levels, as some energy infrastructure had been damaged by strikes and other facilities would require time to restart.

Additionally, summer demand would likely strengthen over the next few weeks, the first trader said, adding that, with diesel cracks now counter-seasonally stronger than jet fuel, refineries were switching to maximize diesel output over jet, which could also gradually help balance the jet fuel market.

The jet fuel FOB barge Brent crack was assessed at a $1.55/b discount to the diesel crack June 30, incentivizing refiners to produce more diesel than its co-distillate, jet fuel.