Jet Fuel Crisis

Added: 2026-05-05

[00:00:00]Hi, welcome back to the channel. In today's episode, I want to talk to you about the jet fuel crisis that is now being caused by the ongoing war in Iran.

[00:00:09]Even though we're in a ceasefire situation, there are still major problems because the strait of Hermuz has not been fully reopened. And to talk about what the implications of this will be for air travel pricing and tourism.

[00:00:22]And anybody that's interested in graphs and has been missing them from my recent videos, you'll be pleased to hear that there are plenty in today's video. But before we get into all of the detail, could I ask anybody that hasn't subscribed yet to please hit that subscriber button? Really does help me with the algorithm and obviously puts a smile on my face. So, let's start with the big picture. What we're seeing right now is a very real and tangible consequence of the war in Iran and in particular the disruption to one of the most important energy choke points in the world, the Strait of Hermuz. This is a route through which normally around 20% of global oil masses on a daily basis. And if you disrupt that even partially, the ripple effects are enormous because it's not just crude oil that's affected. its refined products including jet fuel which is absolutely critical for global aviation. So let's start by looking at supplies and this first graph is a really important one because it sets the scene for everything else. What this chart shows is the overall structure of jet fuel supply into Europe. Total demand runs at around 1.6 million barrels of jet fuel per day.

[00:01:31]That's a lot of jet fuel. So that's the baseline. That's what Europe needs every day just to keep the planes in the air.

[00:01:38]Now, of that 1.6 million barrels, around 1.1 million is produced domestically within Europe. So, Europe is producing a significant amount of its own jet fuel, but it's not enough. And that leaves a gap of around 500,000 barrels per day, half a million, that needs to be imported. And if we break that down further, around 375 barrels per day normally comes from the Middle East. and around 125,000 barrels per day from non- Middle Eastern sources. So what that means in simple terms is that roughly onethird of Europe's jet fuel demand is reliant upon imports and the majority of that comes from the Middle East. And that is the key vulnerability here because if you disrupt flows from the Middle East, which is exactly what's happening right now, then you immediately create a structural shortfall in the system. So this isn't a just a short-term issue. This is a fundamental supply imbalance in Europe.

[00:02:36]Now, if we move on to the second chart, this is where you can actually see that disruption playing out in real time.

[00:02:43]This chart shows jet fuel imports into Europe over the last 2 years, dating back to April 2024. And what's really striking here is the trend that we're seeing since September of 25. Up until that point, imports were relatively stable. But since then, there's been a dramatic reduction in the volume of imports coming into Europe. And if you look at the most recent data for April 26, it's sitting at the lowest level that we've seen at any point in the last 2 years. Now, what's also interesting about this chart is the breakdown by source. You can see that large yellow section represents imports from the United States if you look at the April bar chart. So what we're seeing here is a significant increase in US exports of jet fuel to Europe. So the US is effectively stepping in to try to fill some of the gap left by the Middle East.

[00:03:35]But at the same time, there's been a huge reduction in those imports from the Middle East. So you've got one source increasing but a much larger source declining. And the net effect is that total imports are falling. And that's a major problem because if this trend continues and there's no reason at this stage to think that it won't, then it moves from being a tightened market into a full-blown crisis. Now, the third chart is probably the most concerning of all, although it's quite a busy one. It looks quite lively. This shows jet fuel stock levels in Europe, and it tracks them for each year going back to 2018.

[00:04:11]So there are multiple lines on this chart which makes it a bit harder to read at first glance. But if we focus specifically on 2026 which is shown by the red line, the trend becomes very clear. At the beginning of this year, jet fuel stocks were sitting at around 1 million tons. Since then, they've fallen sharply down to around 650,000 tons. So we've seen a very significant draw down in a relatively short period of time.

[00:04:39]And more importantly, the direction of travel is very clear downwards. If this trend continues, which again looks likely given the supply situation right now, then we are heading towards the lowest levels of jet fuel stocks that we've seen at this point in the year at any time in the last 8 years. And that's where things start to get uncomfortable because once inventories get too low, the system loses its resilience. There's no buffer left. And that means even a small additional disruption can have a much bigger impact. And then finally, let's look at the price chart because this is where all of this feeds through into the real economy. This chart goes way back to the 1980s and it shows jet fuel prices in dollars per metric ton.

[00:05:25]And what you can see very clearly is the impact of the current crisis. The recent move in prices is almost vertical. The war in Iran has driven jet fuel prices up to levels that we simply have not seen before. This is higher than previous spikes, higher than earlier geopolitical crises, and higher than anything we've seen in modern history.

[00:05:46]And that's the key takeaway here. This isn't just another fluctuation. This is an extreme move. And that is going to feed directly through into airline costs, ticket prices, and ultimately the cost of travel. Now, one key question is whether this is just a European issue, and the answer is no. Other regions are also feeling some pressure, particularly those that are reliant heavily on Middle Eastern supplies, but Europe is especially exposed. The USA does have domestic refining capacity. Some Asian countries also have strategic reserves, but Europe relies heavily on imports, which makes it more vulnerable when those supply chains are disrupted. So, where does this all go from here? Well, a lot depends on the situation in Iran and how it develops. If tensions escalate further, disruption could continue or become even worse. If shipping routes remain restricted like they are at the moment, supply chains will stay under pressure. And while the EU is now working on contingency plans, these things take time. You can't just replace lost supply overnight. Energy markets are complex, refining capacity is limited, and logistics take time to adjust. So, what does all of this mean for travelers in simple terms? Higher ticket prices, potentially fewer flights, and possibly even route cancellations if conditions deteriorate further. And that feeds directly into tourism. Because if flying becomes more expensive, fewer people travel, which then impacts hotels, restaurants, attractions, and entire local economies.

[00:07:24]So what starts as a geopolitical issue, a war in the Middle East that wouldn't impact on anyone quickly becomes a global economic crisis. So overall, this is a very clear example of how interconnected the global economy really is. a conflict in one region, a disruption to a key shipping lane, and suddenly you've got a jet fuel crisis affecting aviation across Europe and potentially beyond and millions of people. So, hopefully you found today's video useful, informative, and most importantly, thought-provoking. I'm trying to get you to think about how interconnected the global economy actually is. If you've liked what I've said, or maybe you didn't like it, but you thought it was interesting, then please give me a thumbs up. Please subscribe to the channel if you haven't done so already. Don't forget, I'm currently running my competition where you come in my property or a cash alternative prize. There's not that much longer to go on this competition. So, if you'd like to get involved, then have a look. We've got some exciting uh promotions on the go at the moment. If you want to do that, then scan the QR code on the screen now or click the link in the description below. It's another way of helping to fund the channel.

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