Europe's Q4 jet fuel flashes red: gap to reach 510,000 bpd, South Korean exports surge to four-year high in emergency fill-in

Europe's fourth-quarter jet fuel supply is set to face a shortfall, even as it turns to distant suppliers including South Korea analysts and shipping data show South Korea's jet fuel exports to Europe will rise to a four-year high in September. Since the Iran war broke out more than half a year ago, disrupting Middle East supply and cutting off about half of Europe's jet fuel imports, Europe has been increasing jet fuel imports from countries including Nigeria, the United States and Canada. As Middle East tensions escalate, Europe remains highly exposed to the risk of further supply disruptions. Consultancy Energy Aspects forecasts Europe's fourth-quarter jet fuel gap will reach 510,000 bpd, while the United States and Asia-Pacific will have surpluses of 18,000 bpd and 419,000 bpd respectively. The third-quarter trend was broadly similar. Shipping flow data show South Korea became Europe's newest major source of jet fuel in September. Data from commodity intelligence firm Kpler show Europe's jet fuel imports from South Korea so far in September stood at 129,000 bpd, the highest since October 2022. LSEG data also show a similar scale. James Noel-Beswick, head of commodities at market intelligence firm Sparta Commodities, said Europe's imports will continue as it is expected to remain short of jet fuel. Jet fuel is a type of so-called middle distillates, which also include diesel and gasoil. European diesel hit a record high this week, outperforming the Asian diesel market. Noel-Beswick added that the widening spread between Asian and European benchmarks makes exporting to Europe more profitable. European jet fuel stocks fall The surge in imports from South Korea comes as inventories sit at low levels. Independently held stocks at the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell to a seven-year low in the week to Sept. 10. Asia is the swing supplier of jet fuel to Europe, with traders typically turning to Asia when they judge the arbitrage the relative prices between the two regions to be profitable. Kpler data show average monthly exports of 1.5 million barrels last year. Government data show South Korea's July jet fuel production hit a seven-year high of nearly 13.89 million barrels, while exports reached a three-and-a-half-year high. Rising refinery crude run rates drove the output increase, with traders expecting August crude processing to be stronger than July. Provisional government data show July refinery throughput was 2.7 million bpd, up 16% from June.