Potential Jet Fuel Shortages in Europe#
Europe may experience jet fuel shortages as soon as June, primarily due to the ongoing closure of the Strait of Hormuz, which is affecting supply levels. Analysts at J.P. Morgan indicate that commercial jet fuel inventories could drop to dangerously low levels.
Supply Replacement Scenarios#
J.P. Morgan's analysis suggests that if only 50% of the usual jet fuel imports from the Middle East are replaced, with the U.S. as the main alternative supplier, stock cover could fall below 20 days by June. This is a critical level that could lead to widespread shortages, especially in countries that already have low inventory levels. Even in a more favorable scenario where 75% of imports are replaced, stock cover would still dip below 20 days by August, coinciding with peak aviation demand.
Europe's Structural Vulnerability#
Europe's vulnerability is significant, with regional jet fuel demand at 1.6 million barrels per day (mb/d) and net imports accounting for over 30% of total consumption. Historically, 70% of these imports come from the Middle East, and many countries began with inventory levels as low as 20 days before the current crisis.
Refinery Limitations and Strategic Reserves#
Refineries in Europe are already operating at or near maximum jet fuel output, making it difficult to increase production without building new facilities, which would take years. Strategic reserves could provide some relief, potentially extending coverage to 50-55 days, but it remains uncertain how much of these reserves the EU would allocate for commercial use. Additionally, refining margins have fluctuated, with rising costs further complicating the situation for European refiners.