Jet Kerosene Price Surge in the US Amid Supply-Side Concerns and Operational Challenges
- 12-Sep-2023 3:10 PM
- Journalist: S. Jayavikraman
During August, the US Jet Kerosene market experienced a significant price surge amid supply concerns and reduced domestic fuel production. Further, the US government has expanded the sanction on Myanmar and obligated additional sanctions on Jet Fuel suppliers.
As per the current data availability, the US market has admitted a substantial hike of 20.1% to settle within 2.989 USD/gallon US Gulf Coast Kerosene-Type Jet Fuel spot price on a FOB basis during August. The surge in prices of Jet Kerosene in the US is a complex issue with multiple contributing factors. On the supply side, several refineries have been experiencing operational problems, which have reduced domestic Jet Kerosene production. Moreover, extreme heat has also hampered the operations of these facilities, further constraining supply. In addition to these supply-side challenges, the broader energy market context is also playing a role in driving up Jet Kerosene prices. Oil prices have risen due to expectations of extended production cuts by major oil-producing nations like Saudi Arabia and Russia. The recent drawdowns from the US Strategic Reserve have also heightened market anxieties.
Furthermore, the US dollar's strength is another factor impacting Jet Kerosene prices. As the US Federal Reserve appears to be trending towards halting interest rate hikes amid lower inflation, this could potentially weaken the dollar, making Jet Kerosene more expensive for foreign buyers. The combined effect of these factors has led to a significant increase in the price of Jet Kerosene in the US.
Interestingly, in August, the United States expanded its sanctions on Myanmar to include the Jet fuel sector, depriving the military regime of the resources it needs to carry out its airstrikes against civilians. The lack of Jet Kerosene significantly impacts the Myanmar economy as it would make it difficult for the Myanmar military to conduct airstrikes. The sanctions come as the Myanmar military has been increasing its use of airstrikes against civilians, particularly in areas where there is widespread resistance to the coup. The latest round of sanctions is a sign that the United States is not backing down in its efforts to hold the military accountable for its abuses.
As per ChemAnalyst, the US Jet Kerosene market will likely remain strong in the upcoming months amid a rise in feedstock crude oil values that may drive the market to showcase a bullish trend. Moreover, the high cost of Jet Kerosene will likely put further pressure on airline margins and could lead to higher ticket prices for consumers in the near term.