Jet fuel prices could spike again in 2027 as inventories shrink, IATA Energy Forum panelists warn
Why It MattersTight inventories, scarce spare refining capacity and competition with diesel leave airlines, especially import-dependent ones, exposed to renewed fuel-cost spikes that would feed into operating costs and charter pricing.
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 (IATA) Energy Forum in Guangzhou, China, said. Rob Macleod, global head of commodity risk solutions at Hartree Partners, said there were 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. He 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 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 jet fuel and crude oil prices, 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. S&P Global Energy forecasts 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.
Competition with diesel is a key factor, as both are middle distillates relying 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 raise diesel output at the expense of jet fuel production and exports. In Asia, the Singapore jet fuel and kerosene crack spread against Dubai crude rose by $10.40 to $66.20 a barrel in October, while jet fuel's discount to diesel widened to $8.30 a barrel.
A shift of refining capacity toward Asia and the Middle East is leaving import-dependent regions more exposed to longer supply routes, freight costs and geopolitical risks. 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 disruption risks.
