Diesel Overtakes Jet Fuel: Europe's Energy Squeeze

Diesel cargoes are now more expensive than jet fuel in Europe, a situation not seen in over a year. This shift reflects Europe's struggle to secure sufficient diesel supplies for industrial and agricultural needs, while managing increased jet fuel imports. Jet fuel imports to Europe surged to 750,000 barrels per day in June, marking a significant rise from earlier in the year.

Conversely, European diesel imports have seen a notable decrease, dropping to 1.56 million barrels per day in July from 1.97 million barrels per day in January. This supply imbalance, exacerbated by geopolitical events like the Iran war and Russian export disruptions, has driven diesel prices upward.

Analysts express concern about sustained diesel scarcity heading into winter, with prices only 14% below their April peaks. Jet fuel prices, while also rising, remain further from their March records. The discount of jet fuel to gasoil futures has widened considerably, indicating relative weakness in jet fuel demand following the summer travel season and anticipating higher European imports.