Europe’s jet fuel reserves fall to critical levels as Middle East tensions escalate

Europe is entering the peak summer travel season with less than a month's worth of jet fuel reserves, reports say, leaving the continent increasingly vulnerable to supply disruptions as instability in the Middle East continues to threaten global energy markets.

According to Reuters, Europe now has the tightest jet fuel market among the world's major aviation regions.

Consultancy Energy Aspects estimates the continent began June with approximately 38 million barrels of jet fuel in storage – enough to cover fewer than 30 days of demand.

By comparison, the United States held roughly 99 million barrels.

Renewed fighting

The supply squeeze comes as renewed fighting surrounding Iran continues to cast uncertainty over shipping routes through the Strait of Hormuz, a vital waterway that normally carries about one-fifth of the world's seaborne oil and liquefied natural gas.

Although the strait partially reopened in June following a temporary ceasefire, renewed military strikes in July have once again raised concerns over the reliability of fuel shipments.

Europe has worked to offset the disruption by increasing refinery production, drawing down fuel inventories and importing larger volumes of jet fuel from the United States and Asia.

However, analysts say those efforts have only bought limited time.

Energy Aspects projects Europe will face a jet fuel supply deficit of nearly 600,000 barrels per day during the third quarter, while the United States and Asia-Pacific are expected to remain in surplus.

Britain, France and Germany are considered among the most exposed markets after decades of refinery closures left Europe increasingly dependent on imports from the Middle East via the Strait of Hormuz. Reuters reports.

The European Commission has also warned that supplies could become even tighter as summer travel reaches its peak.

EU Energy Commissioner Dan Jørgensen said in June that Brussels is prepared to coordinate the release of national fuel reserves if necessary.

Until fighting escalated earlier this year, Europe sourced roughly half of its imported jet fuel from the Middle East.

Since then, suppliers have diversified their shipments, with Europe importing a record 673,000 barrels per day of jet fuel in June, according to commodities intelligence firm Kpler.

The United States and Nigeria became Europe's largest suppliers during the month, while Canada, India, Kuwait and South Korea also increased exports.

Mounting pressure

Despite these efforts, airlines continue to face mounting financial pressure.

The International Air Transport Association (IATA) says jet fuel prices have more than doubled compared with a year ago, while crude oil prices have climbed roughly 43 per cent.

Fuel typically accounts for between 20 and 25 per cent of an airline's operating costs, meaning sustained price increases can quickly erode profitability.

The higher fuel costs also come as European carriers prepare to meet ReFuelEU requirements, which will require airlines to increase their use of sustainable aviation fuel (SAF) over the coming years.

Industry observers say the combination of soaring conventional fuel prices and SAF mandates is placing additional pressure on airline margins, Simple Flying reports. 

Although wholesale jet fuel prices in northwest Europe have eased from record highs reached in March, analysts caution travellers should not expect cheaper airfares.

Strong demand and limited airline capacity are expected to keep ticket prices elevated, while carriers may introduce fuel surcharges or trim long-haul schedules if supply conditions worsen.

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