Soaring jet fuel prices deal a blow to the fragile recovery of air transport

A business jet is refueled with Jet A fuel at Henderson Executive Airport during the National Business Aviation Association (NBAA) show in Las Vegas, Nevada, U.S., October 21, 2019. REUTERS/ David Becker

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SINGAPORE, March 8 (Reuters) – Global jet fuel prices hit nearly 14-year highs in line with surging crude oil over worries of supply shortages, slamming air carriers and travelers with steep increases of costs just as air travel was beginning to recover from COVID -19 restrictions.

Oil prices hit their highest level since 2008 as supply lags the recovery in global demand and the United States weighs a ban on Russian oil imports following the invasion of Ukraine via Moscow. Read more

The global crude oil benchmark, Brent, has jumped 26% to over $120 a barrel since Russian forces invaded Ukraine on February 24, sparking a global rush by importers to find alternatives to Russian crudes that risk penalties.

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Jet fuel prices hit 14-year highs and outperform crude on supply issues

The run on crude has pushed up prices of refined products that will be affected if crude supply tightens, with jet fuel prices in Singapore outperforming Brent since Feb. 24 to gain nearly 35% to hit $150 a barrel for the first time since July 2008.

Jet fuel prices in Europe and the United States have seen similar gains, forcing global carriers that have already been hammered by COVID-19 over the past two years to pass on higher costs through fuel surcharges and higher fares. students. Read more

Soaring global jet fuel prices threaten to stifle air travel recovery

In turn, the fare hikes risk undermining a recovery in air travel that has accelerated with the relaxation of international borders.

“Travelling (by plane) won’t be cheap from now on. With inflation in every country, most people have shallower pockets, less disposable income,” said a Singapore-based jet fuel trader.

She said more travelers would limit their plans to “necessary” travel and said pandemic-related restrictions – with many places still requiring negative COVID tests – have added to uncertainties for those traveling.

Global airline capacity fell 0.1% this week to 82 million seats and remains 23% lower than the corresponding week in 2019 before the pandemic, according to aeronautical data firm OAG.

Global airline seat bookings remain well below 2019 levels in most regions

Total scheduled airline capacity in Northeast Asia week to Monday fell 4.5% from the previous week, more than any other region, while international capacity to and from the region remains 88% lower than the corresponding week in 2019.

Change in worldwide aircraft seat reservations compared to 2019 by region

U.S. domestic flight schedules were on track to surpass 2019 levels this spring, but rising fuel and ticket costs now risk dampening that momentum.

“Airlines will again be pushed on credit limits and again see suppliers less willing to give unsecured terms. We may see more post-COVID casualties now, just when the recovery looked more positive” , said a London-based trade source.

US domestic airline bookings on track to recover above 2019 levels; international bookings still weak

Buoyed by expectations of a near-term supply crunch, Asian refining margins for jet fuel jumped to $26.17 a barrel against Dubai crude on Monday, their highest level on record according to data from Refinitiv Eikon that date back to 2009.

Asia’s jet fuel refining margins hit all-time highs after jet fuel prices surge to 14-year high
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Reporting by Koustav Samanta; Editing by Gavin Maguire and Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

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