Global jet fuel prices could rise sharply again in 2027 as inventories shrink, spare refining capacity remains limited and geopolitical risks persist, panelists at the International Air Transport Association's (IATA) Energy Forum said.
Report informs, citing S&P Global Energy, that the panel discussion took place in Guangzhou, China.
Rob Macleod, global head of commodity risk solutions at Hartree Partners, said there were some grounds for near-term optimism, but the market could face another supply shortfall in 2027 if disruptions linked to the Middle East and Russia persist.
Macleod said global jet fuel stocks had fallen to extremely low levels, leaving the market more exposed to supply shocks. A hurricane on the US Gulf Coast, for example, could expose the lack of spare refining capacity and trigger another price spike.
S&P Global Energy CERA's November outlook showed that global jet fuel inventories continued to fall in October as demand outpaced supply and refiners prioritized diesel production.
The global jet fuel crack spread, the difference between the prices of jet fuel and crude oil, averaged $72 a barrel in September. Analysts expect it to rise to $74 in the fourth quarter of 2026 before falling to $51 in the first quarter of 2027 and $40 in the second.
The projected decline in refining margins comes as demand for air travel recovers. S&P Global Energy forecasts that global jet fuel demand will rise by 1.17 million barrels per day in 2027 after falling by 255,000 barrels per day in 2026. James Simpson, global head of aviation market research at S&P Global Energy, said he did not expect prices to stabilize next year.
Competition with diesel is a key factor in jet fuel prices and availability. Both are middle distillates and rely largely on the same refining capacity. S&P Global Energy said a sharp drop in Middle Eastern exports and Russia's prolonged ban on diesel exports had kept diesel supplies tight, prompting refiners to increase diesel production at the expense of jet fuel output and exports.
The squeeze has been particularly evident in Asia ahead of winter. In October, the Singapore jet fuel and kerosene crack spread against Dubai crude rose by $10.40 to $66.20 a barrel, while jet fuel's discount to diesel widened to $8.30 a barrel.
Seasonal demand for heating oil and tight supplies of middle distillates are expected to keep Asian crack spreads elevated in November and December. Platts assessed the Singapore FOB jet fuel and kerosene crack spread against Dubai crude at $59.55 a barrel on November 11.
A shift in refining capacity toward Asia and the Middle East is putting further pressure on the market, leaving import-dependent regions more exposed to longer supply routes, freight costs and geopolitical risks. Simpson cited jet fuel shipments from South Korea to Europe as an example of how far supplies now travel to meet European demand.
Platts put the price gap between Northwest European CIF and Singapore FOB jet fuel and kerosene cargoes at $30.33 a barrel on November 11, up from $26.10 a day earlier. Rising freight costs also pose risks for Australian airlines that buy fuel priced against Singapore benchmarks.
Over the longer term, panelists said electrification could reduce gasoline demand and lead some refineries to close, while demand for jet fuel and for diesel used in freight, mining and agriculture is likely to hold up better. A decline in overall refining capacity could intensify competition for feedstocks and production capacity.
Panelists said keeping European refineries operating, diversifying suppliers and maintaining spare capacity could reduce the risk of disruptions. Even buyers close to refineries can face supply interruptions if accidents halt production or export restrictions are imposed.