Jet Kerosene Prices Soar in July on Strong Demand and Crude Oil Swings

In July 2024, the global Jet Kerosene market experienced a notable surge, largely driven by early-month fluctuations in crude oil prices, a key raw material. These fluctuations have resulted in higher production rates and increased energy costs. These factors have collectively exerted upward pressure on Jet Kerosene prices. The demand for Jet Kerosene has remained robust, particularly from the aviation sector, as the holiday season has bolstered travel activity. This sustained demand has further contributed to the rise in Jet Kerosene prices, as airlines continue to operate at high capacity to meet the needs of travellers.

The USA have remained robust as air travel demand reaches record levels. This surge in travel activity has prompted U.S. airlines to increase capacity, offering approximately 6% more seats compared to July 2023. This expansion in capacity has exerted upward pressure on Jet Kerosene demand, driving increased consumption across the industry. The strong demand for air travel is reflective of a broader recovery in the aviation sector, as both leisure and business travel see significant growth. As a result, airlines are operating more flights and utilizing larger aircraft to accommodate the increased number of passengers, further fuelling the demand for Jet Kerosene.

Similarly in Europe Jet Kerosene prices have surged significantly, impacting the aviation industry as it strives to reduce emissions. Market insights suggest that airlines may need to raise fares to offset the increased costs of cleaner fuels. As the sector shifts towards more sustainable energy sources, it faces financial pressures due to the higher cost of Sustainable Aviation Fuel (SAF) compared to traditional petroleum-based fuels. The transition to SAF, while crucial for reducing greenhouse gas emissions, poses a challenge because of its current price premium. This increase, coupled with fluctuating crude oil prices, creates an inflationary environment for European airlines. To maintain profitability while adhering to environmental commitments, airlines are likely to adjust their pricing strategies, potentially leading to higher ticket prices for consumers.

Concurrently, in the Indian market has risen significantly due to several key factors. Some states have increased the value-added tax (VAT) on aviation turbine fuel, and airports across the country have raised certain fees, contributing to an inflationary environment that impacts airline operations. These regulatory changes, combined with strong demand and rising crude oil prices, have intensified financial pressures on airlines, affecting pricing strategies and operational planning. Additionally, India's diesel and jet kerosene shipments to Singapore and Australia are set to reach their highest levels in two and a half years in July. This increase in exports is driven by tepid demand from Europe, prompting sellers to look eastward. The shift in Jet kerosene export focus reflects the dynamic nature of global fuel markets and the strategic adjustments made by Indian fuel suppliers to capitalize on stronger demand in Asian markets.

According to ChemAnalyst's analysis, the Jet Kerosene market is anticipated to experience a decline in the coming months, primarily driven by decreasing commodity prices and a reduction in seasonal demand.