Fuel market “on steroids”. Aviation fuel by 122 percent upwards of $1,700 per ton

Aviation fuel prices since the beginning of this year. increased by 122 percent to a record level above $1,700. per tonne; this is a faster growth than in the case of diesel, which increased in price by 107% at the same time. – results from the analysis of PKO Bank Polski economists.

“During the session on March 23, ARA (Amsterdam-Rotterdam-Antwerp) diesel prices on the ICE exchange increased to USD 1,438/t, the highest level since March 2022. Diesel prices have increased by 71% this month and by 107% since the beginning of the year. Local aviation fuel prices increased even more – by 82% and 122%, respectively, and its price set a record above USD 1,700/t,” the authors of the commentary indicated.

They added that middle distillate markets (which include diesel oil – PAP) “behave like crude oil on steroids”. As they indicated, the increase in the value of Brent crude oil has been 38% since the beginning of the month and 64% since the beginning of the year. In March, the price of this raw material increased to almost $120. per barrel, i.e. the level in 2022.

Europe cut off from 54 percent import of aviation fuel

According to economists, the high prices of middle distillates in Europe are the result of Iran's blockade of the Strait of Hormuz caused by American-Israeli attacks on this country. Citing data from Vortexa, they noted that in 2025, the Persian Gulf countries were responsible for 13%. global diesel exports and 23 percent aviation fuel. In the case of the European Union and the United Kingdom, last year's imports of diesel and jet fuel from the Middle East amounted to 21 and 54 percent, respectively.

As explained in the analysis, the reason for the strong appreciation of jet fuel is “significant structural market imbalances” as Europe has long been a net importer of the fuel. Its stocks at the ARA hub (Amsterdam–Rotterdam–Antwerp) amount to 737,000. tons and are 16 percent lower than a year ago and 13 percent lower than the 5-year average. Diesel and diesel oil stocks amount to 2.1 million tonnes, i.e. 3%. more than a year earlier, but 4 percent less than the average from the past 5 years.

The specter of oil and fuel shortages. Asia limits exports, Europe counts stocks

It was also noted that, according to LSEG's forecasts, imports of middle distillates to Europe will amount to 5.6 million tons in March, which would mean an increase of 25%. on a monthly basis. In turn, deliveries from the Middle East are expected to amount to a record 2.8 million tons, but most of this fuel was loaded before the outbreak of the war. The forecasts of LSEG experts quoted in the commentary also show that in the event of a prolonged war in Iran, the prices of middle distillates “will remain elevated.”

“The conflict may escalate deepen market imbalances in Europe and Asia and additionally increase the prices of middle distillates (which will be partially cured by demand destruction). Asian producers are already limiting fuel exports due to the decline in the supply of the raw material, and some countries dependent on its import have recommended fuel conservation, which reflects growing concerns about shortages of both oil and refinery products,” the bank's economists said.

Israel and the US launched airstrikes on Iran on February 28. Tehran responded by attacking Israel and several Persian Gulf countries, hitting both American bases located there and civilian facilities. The war in the Middle East virtually resulted in the closure of the Strait of Hormuz to maritime traffic from the Persian Gulf, which resulted in export congestion. (PAP)

bpk/mmu/