Europe jet fuel deficit pulls South Korea cargoes westward

Europe jet fuel supply faces a 510,000-barrel-a-day fourth-quarter deficit, keeping the region reliant on imports again. Korean cargoes are rising.

Korean barrels head west

South Korea has become a larger source of jet fuel for Europe in September, according to shipping flows tracked by Kpler. European imports from the country have reached 129,000 barrels per day so far this month, the highest level since October 2022, while LSEG data showed similar volumes.

The cargo shift comes as Energy Aspects forecasts Europe will be short 510,000 barrels per day in the fourth quarter. The consultancy projects surpluses of 18,000 barrels per day in the United States and 419,000 barrels per day in Asia-Pacific over the same period, leaving Europe more exposed to imported supply.

Middle East flows thin

Analysts said the conflict involving Iran, which began more than six months ago, disrupted Middle East supplies and removed roughly half of Europe’s normal jet fuel imports. Since then, the region has drawn more barrels from Nigeria, the United States, Canada and, in September, South Korea.

Those longer routes matter for airlines, traders and refiners because jet fuel procurement depends on both refinery output and shipping economics. James Noel-Beswick, head of commodities at Sparta Commodities, said Europe’s imports are set to continue while the continent remains short of the fuel.

ARA stocks show pressure

The new Korean flows are arriving as independently held jet fuel stocks in the Amsterdam-Rotterdam-Antwerp storage hub have fallen to their lowest level in seven years. The data cover the week to September 10, giving traders a regional inventory marker before the fourth-quarter demand period.

Jet fuel is part of the middle distillates group, which also includes diesel and gas oil. European diesel markets reached a record high this week and traded firmer than Asian diesel markets, according to market data cited by traders.

Noel-Beswick attributed the westbound pull to the widening spread between Asian and European benchmark prices. When the European premium expands enough to cover freight and handling costs, traders have a clearer incentive to move Asian cargoes into Europe.

Korean refineries lift runs

South Korean government data showed jet fuel output in July near 13.9 million barrels, a seven-year high. Exports also reached a 3.5-year high that month, aligning refinery production with stronger overseas demand.

Provisional government data put South Korean crude processing at 2.7 million barrels per day in July, up 16% from June. Traders expect August crude runs to be firmer than July, according to the source data, which would support additional product availability if export margins remain open.

Asia has long acted as a swing supplier for Europe’s jet fuel market. Kpler data showed average monthly South Korean exports to Europe at 1.5 million barrels last year, a lower baseline than the September pace indicated by current flows.

Deficit paths shape costs

If Middle East supply stabilizes and Korean refinery runs stay elevated, longer-haul imports could narrow Europe’s deficit without eliminating it. That path would keep global refined-product balances tight, support Asian refiners with export demand and leave European airlines tied to freight rates as well as fuel prices.

If tensions interrupt more cargoes, Europe would have to draw harder on United States and Asia-Pacific surpluses forecast by Energy Aspects. The main open questions are whether ARA inventories rebuild from the September 10 low and whether the Asia-Europe price spread remains wide enough to keep cargoes moving west.