Morgan Stanley reports jet fuel loadings and inbound volumes destined for Northwest Europe have declined to record lows, with loadings under 200,000 barrels per day and volumes below 2 million barrels per day. While arrivals remain subdued, they are performing better than market expectations.
Most refineries across the European Union are running at or near maximum jet fuel production, limiting the scope for further local output increases. Additional imports from Africa and the United States have added roughly 100,000 to 150,000 barrels per day, but that has not matched the approximately 300,000 barrels per day previously supplied from the Middle East to the EU and UK.
There was a notable uptick in arrivals in March, which Morgan Stanley attributes largely to inflows from the United States. That month provided a temporary easing of supply pressures for the EU, but the bank expects jet fuel crack spreads to remain elevated going forward.
Airline capacity plans for the second quarter of 2026 show a mixed picture across carriers and business models. Among low-cost carriers, Ryanair has kept its capacity broadly unchanged compared with its position eight weeks earlier. Wizz Air and Tui have trimmed capacity by 6% and 3% respectively over the same interval.
- On a year-over-year basis, low-cost carrier capacity is still higher - up 8% in the second quarter and 9% in the third quarter of 2026 - despite the recent cuts by some operators.
- Legacy carrier Lufthansa has taken a more active stance on capacity management, cutting 2.5% in the second quarter of 2026 versus its plan eight weeks prior, with reductions concentrated in the Middle East, Germany, and France.
In sum, the European jet fuel market is experiencing constrained supply as domestic refining runs near practical limits and incremental imports fall short of prior Middle East volumes. Temporary relief from U.S. shipments was observed in March, but ongoing elevated crack spreads and airline capacity shifts underline remaining market tightness.
Summary
Jet fuel loadings to Northwest Europe are at record lows, EU refiners are operating near maximum capacity, alternative imports from Africa and the U.S. are insufficient to replace Middle East volumes, March saw a temporary rise in arrivals, and carriers have made mixed capacity adjustments for Q2 2026.
Key points
- Jet fuel loadings to Northwest Europe recorded below 200,000 barrels per day; inbound volumes under 2 million barrels per day.
- Incremental imports from Africa and the U.S. add about 100,000-150,000 barrels per day, versus roughly 300,000 barrels per day previously supplied from the Middle East.
- Airline capacity changes: Ryanair flat; Wizz Air down 6%; Tui down 3%; Lufthansa down 2.5% in Q2 2026.
Risks and uncertainties
- Supply shortfalls - Continued limited incremental imports relative to prior Middle East volumes could sustain elevated fuel crack spreads, affecting airline operating costs and refining margins (impacts on the aviation and refining sectors).
- Volatile arrivals - While March brought higher arrivals due to U.S. inflows, that relief was temporary and future arrival patterns are uncertain (impacts on jet fuel markets and airline capacity planning).
- Airline capacity shifts - Continued or deeper capacity reductions by major carriers could affect demand recovery for jet fuel, with knock-on effects for airports and travel-related services (impacts on airlines and travel sectors).