MARKETS: IEA flags jet-fuel squeeze as global oil supply tightens

(SpaceEnergy) Global jet-fuel and refined-product markets tightened sharply in July as disrupted Middle East and Russian supplies pushed refining margins to record highs, according to the International Energy Agency.

The International Energy Agency (IEA) said global refinery crude throughput rose by 1.8 million b/d in July but remained nearly 5 million b/d below year-earlier levels, leaving insufficient capacity to offset product supply bottlenecks.

Jet-fuel exports from Russia, the Middle East and Asia fell by around 670,000 b/d year on year, equivalent to 34% of global seaborne jet-fuel trade. Diesel exports from the same regions were 1.3 million b/d lower. The squeeze pushed Atlantic Basin refining margins to all-time highs as jet fuel, diesel and gasoline cracks strengthened.

Tighter jet-fuel supplies and stronger refining margins also increased pressure on kerosene costs, providing a firmer underlying market for rocket-grade kerosene and the SE Kerolox Index (SEKI).

The SEKI was assessed last at 103.34 points, up more than 16% since late June.

Crude markets also tightened. North Sea Dated rose $25.67/bbl during July to end the month at $96.80/bbl, while global observed oil inventories fell by 69 million barrels.

The IEA attributed the tightening to renewed disruption to Gulf exports, attacks on Russian refineries and the effective closure of the Strait of Hormuz. It now expects global oil supply to decline by 4.3 million b/d on average in 2026.