Jet fuel prices in Asia have surged to their highest level against gasoil in five years, driven by robust demand for the fuel used for winter heating and aviation. This price increase is a reflection of the growing optimism in the downstream aviation sector and a supply crunch due to curtailed refinery output.
.gif)
The benchmark jet fuel refining margins, also known as cracks, in Singapore hit a record high of $50.75 a barrel over Dubai crude. This is the highest level since Refinitiv started tracking the data in 2009. This surge in jet fuel prices comes as countries in the Asia Pacific region are easing travel restrictions amid rising vaccination rates. Countries like Australia, Singapore, India, and Thailand are among those easing restrictions, which is boding well for the jet fuel market.
The resumption of flights in China, Asia's top jet fuel consumer, is providing a tailwind for a recovery in demand for aviation fuel across Asia. The International Energy Agency expects China's jet fuel demand to rise in 2023 by 43% from a year earlier to 701,000 barrels per day.
The increase in Chinese jet travel is part of a broader jump across Asia that should boost fuel consumption in 2023. Scheduled airline capacities from northeast and southeast Asia are up by 22% and 73%, respectively. The rise in jet fuel prices is a clear indication of the recovery of the aviation industry post-pandemic. However, it also poses challenges for airlines as they grapple with higher operating costs. The industry will be closely monitoring these trends as they navigate the path to recovery.