US jet surges to eight-week high as Gulf tension disrupts supply

The US jet fuel benchmark rose sharply to an eight-week high on July 14, after fresh tensions in the Middle East brought global oil supplies under threat again in the Strait of Hormuz amid a recent shift in refiner yields from max jet to diesel.

Platts, part of S&P Global Energy, assessed the US Gulf Coast jet for Colonial Pipeline's 42nd cycle at NYMEX August ULSD futures minus 39.00 cents/gal on July 14, lifting the outright price by 28.82 cents/gal to $3.6243/gal on July 14. That is the highest since May 19, when it was assessed at $3.8589/gal, but lower still by $1.1568/gal since April 2, when the benchmark rose to an all-time high.

"Looks like European jet is going nuts today," a US jet trader said July 14.

The European jet benchmark — CIF Northwest Europe Cargoes — was assessed higher by $94.50/mt to $1,241/mt on July 14, which is roughly equivalent to a 28.48-cent/gal increase to $3.745/gal.

"US and European refiners switched to max diesel yields and jet exports are massively up at the USGC," a second US jet trader said July 14.

The jet-ULSD regrade was estimated in favor of jet by nearly 6.05 cents/gal on July 14, ending 12 consecutive sessions where diesel at the Gulf Coast offered a greater production incentive.

The arbitrage window for USGC jet into Northwest Europe remained open at $7.28/b on July 13, driven by a substantial premium of CIF NWE jet cargo over waterborne USGC jet, according to the latest Platts Refined Products ArbFlow report.

Jet fuel and kerosene stocks in the Amsterdam-Rotterdam-Antwerp hub fell 4.52% week over week to 592,000 metric tons in the week to July 10, Insights Global data showed July 13.

Market sources said prompt supply in Europe is keeping the market bearish, but forward supply in August and September could tighten.

US jet fuel output rose 193,000 b/d year over year in the week to July 3 to the second-highest level on record, the US Energy Information Administration said July 8,

The EIA measured US inventories at 47.576 million barrels in the latest week, down by 433,000 barrels from the week prior but up by 3.334 million barrels from the same week last year.

USWC trades higher

At the US West Coast, Platts assessed the Los Angeles pipeline price at NYMEX August ULSD futures minus 28.75 cents/gal on July 14, up by 6.25 cents/gal on the day, and setting the outright price higher by 25.32 cents/gal to $3.7268/gal.

"People starting to do September Los Angeles jet trades already," a third US jet trader said July 14.

Forward month Los Angeles jet was heard traded higher than prompt at discounts of 20.00 cents/gal and 18.00 cents/gal to the September futures contract in the latest MOC.

The arbitrage window for South Korean jet fuel into the US West Coast remained open at $8.39/b on July 13, supported by a delta price of $13.02/b between Pipeline Los Angeles jet and FOB South Korea jet, even as freight costs for the North Asia-USWC Medium Range route for 30,000-ton shipments stood at $7.40/b, according to Platts data.

The Jet FOB Singapore Cargo assessment rose by $28.51/b to $158.04/b on July 14, which could add pressure to the import arbitrage at the USWC.

Gulf tensions escalate

Middle distillates markets reacted sharply to escalating Middle East tensions on July 14.

Vessel transits in the Persian Gulf fell to 11 on July 12, down from wartime peaks of 92 following the June 17 ceasefire, according to S&P Global Commodities at Sea data.

Renewed US strikes against Iran and attacks on commercial vessels have prompted shipowners to reassess voyage risks, while US President Donald Trump has announced a 20% tariff for safe passage through the Strait of Hormuz. Traders expect conditions to tighten in the second half of August as Middle East flight cancellations weigh on aviation demand and refineries delay yield switches away from jet fuel.