European Jet Fuel Market Shifts to Surplus as Production Surges

The European jet fuel market experienced a significant shift in the final weeks of June 2026, moving from a period of limited availability to a prompt supply surplus. This development occurred despite healthy seasonal demand, primarily due to a substantial increase in regional refinery production and robust import volumes, as reported by Alkagesta. [alkagesta.com/european-jet-fuel-2026/]

Industry participants noted a 'damp' outlook for the high-summer period, indicating that earlier concerns about a supply crunch had receded following the normalisation of shipping routes.

Production Upswing and Inventory Recovery

European refineries considerably boosted jet fuel production in early Q2 to capitalise on high crack spreads, resulting in a 32% overall output increase across the region. Certain nations reported even more dramatic rises between February and April, with Denmark's production up by 218%, Hungary by 120%, and Portugal by 95%.

However, by late June, the economic incentive for high jet production diminished as the physical jet-diesel regrade turned negative, reaching -$1.56/b on 26 June. Consequently, refiners are anticipated to adjust yields to prioritise diesel and gasoline output for the remainder of the summer.

Jet fuel and kerosene inventories in the Amsterdam-Rotterdam-Antwerp (ARA) hub, which had dropped to a six-year low of 514,000 metric tons in early June, subsequently recovered to 554,000 metric tons by 25 June. Despite a 1.28% weekly build, current levels remain approximately 40% below the previous year's figures.

Aviation demand, while described as 'good', is not 'strong'. Structural efficiency gains by airlines, including AI-driven route optimisation and cost-cutting, have curtailed a full return to pre-crisis fuel consumption patterns. Furthermore, of the 107 million barrels of strategic reserves earmarked for release by European governments earlier in the year, only 68% comprised refined products, delaying their market availability.

Price Volatility and Trade Flow Shifts

Northwest European CIF jet fuel cargo prices demonstrated considerable volatility in the last two weeks of June. Starting at $992.25/mt on 15 June, prices plummeted to a monthly low of $912.25/mt by 26 June, the lowest since the regional conflict began in late February. A partial recovery saw prices reach $944.00/mt by 29 June. Mediterranean cargo prices mirrored these movements, falling from $990.75/mt to $910.75/mt before recovering to $942.50/mt over the same period.

The physical Jet CIF NWE cargo differential to the front-month ICE low-sulfur gasoil (LSGO) contract also collapsed, dropping from $58/mt to a low of $30.25/mt by 25 June, its weakest point since early March. This differential later saw a modest rebound to $37/mt. The jet-diesel regrade turned negative, reaching -$1.56/b by 26 June, indicating a clear economic shift away from jet fuel production.

European jet fuel imports for June reached approximately 2 million metric tons, double the volume observed in May. France notably increased its intake to 242,000 metric tons in June from 40,000 metric tons in May. The Dangote refinery in Nigeria significantly boosted its supply to Europe, contributing 451,000 metric tons in June, nearly double its May total, and solidifying West Africa's role as a net exporter. Indian and Egyptian barrels also redirected to Europe, supplying 197,000 and 207,000 metric tons respectively, taking advantage of attractive arbitrage opportunities. Pipeline deliveries also supported supply to major European airports, including Brussels and Frankfurt.

Outlook

The European jet market is anticipated to remain under pressure through July due to the ongoing prompt supply surplus. Market participants expect a gradual return to balance by late August as the peak summer travel season concludes. Longer-term, structural shifts in aviation demand, driven by airline efficiency measures and AI-powered optimisation, are seen as persistent headwinds that may prevent a full recovery to previous consumption levels.