Platts jet CIF NWE cash premium soars to record high on supply concerns

The Platts jet CIF NWE cash premium to front-month ICE low sulfur gasoil hit a record high on March 3, as market participants expect acute supply tightness because of the lack of ship traffic through the Strait of Hormuz as the war in the Middle East continues.

At plus $213/metric ton, the differential was the greatest since Platts started assessing ICE LSGO futures in 2005.

The market will tighten significantly if the conflict continues and ship traffic through the Persian Gulf chokepoint cannot increase, according to market participants. This comes as the market was already tight with a drop in Indian and Chinese flows after the EU's 18th sanctions package on Russian-origin refined products came into effect on Jan. 22.

"Physical is about to become very tight with the Strait of Hormuz issues, and tightness will probably kick in mid to back end of March -- depends on what happens next," one European jet market participant said.

"There are no sellers – even if you have oil you cannot get them out; and now ships cannot even get insurance," said a European jet trader, adding that it will all depend on how long the conflict continues.

Platts is part of S&P Global Energy.