Overview
Europe is projected to run short of jet fuel in the fourth quarter, even as the continent taps far-flung sources such as South Korea to fill the gap. Analysts and shipping flow data indicate that European buyers have been importing higher volumes of jet fuel from countries including Nigeria, the United States and Canada since disruptions linked to the Iran war more than six months ago curtailed Middle Eastern supplies and cut off around half of Europe’s jet imports.
Forecasted deficits and regional balances
Consultancy Energy Aspects estimates a fourth-quarter jet fuel shortfall in Europe of 510,000 barrels per day. By contrast, the United States and the Asia-Pacific region are forecast to record surpluses of 18,000 barrels per day and 419,000 barrels per day, respectively. The consultancy noted that the third-quarter pattern showed a similar regional divergence.
South Korea’s role expands
Data on flows show South Korea has recently become a significant source of jet fuel shipments to Europe. Commodities intelligence firm Kpler reports that European imports from South Korea in September averaged 129,000 barrels per day, the highest level since October 2022. LSEG data show broadly similar volumes for the month. That surge comes as European processors and traders seek supplies from regions outside the Middle East.
Inventories and arbitrage dynamics
Shipments from Asia as a swing supplier are coinciding with depleted inventories in Europe. Stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell to their lowest level in seven years in the week to September 10. Traders typically turn to Asia when the arbitrage - the price differential between regions - makes exports into Europe profitable, and recent widening of spreads between Asian and European benchmarks has increased the incentive to redirect barrels into Europe.
James Noel-Beswick, head of commodities at market intelligence firm Sparta Commodities, said that with the continent expected to remain short of jet fuel, imports into Europe are likely to continue. He also noted that the widening spread between Asian and European benchmarks is making exports into Europe more attractive.
Middle distillates and related markets
Jet fuel is classified among the middle distillates, a group that also includes diesel and gas oil. European diesel reached a record high this week and was trading firmer than diesel markets in Asia, indicating tightness across middle distillate markets in Europe.
South Korean refining and output trends
Government and industry figures show South Korea has ramped up jet fuel production. In July, jet fuel output in South Korea reached almost 13.89 million barrels, a seven-year peak, while exports hit a three-and-a-half-year high. Officials attribute the rise in output in part to increased refinery crude processing rates. Provisional government data put July refining runs at 2.7 million barrels per day, a 16% increase from June. Traders expect refinery crude runs in August to be firmer than in July, which would support continued export volumes.
Trade flows and seasonal norms
Asia acts as a swing supplier for Europe, with traders turning to the region when the economics justify exports. Kpler data indicate average monthly exports last year were 1.5 million barrels, reflecting the role Asia can play in rebalancing regional shortages.
Implications
The combination of reduced Middle Eastern supplies, low ARA inventories and stronger Asian output has reshaped trade flows into Europe. While distant suppliers such as South Korea are filling some of the shortfall, Europe remains exposed to further shocks should tensions in the Middle East escalate or if arbitrage conditions change.