US East Coast jet fuel costs soar on shortage fears

Jet fuel prices are soaring on the US East Coast, home to some of the world’s busiest airports, with buyers anticipating a worsening shortage as supply dwindles amid sanctions on Russian energy exports. Following Moscow’s Feb. 24 invasion of Ukraine, the United States and allies slapped heavy sanctions on Russia, leading to a tightening in worldwide energy markets. Russia is the world’s largest exporter of crude and petroleum products, and the supply crunch is filtering through to global markets. The East Coast largely relies on shipments on the Texas-to-New Jersey Colonial Pipeline for refined products, as well as imports from Europe. However, Europe is dealing with its own supply strains, so distillate exports to the U.S. East Coast - also known as PADD 1 - are down nearly 60% on a year-on-year basis, according to Refinitiv Eikon data. East Coast jet fuel costs have reached record highs in recent days, with spot prices in New York Harbor exceeding $7.30 per gallon on Monday, more than double the seasonal average, according to Refinitiv Eikon data. “It is ridiculous what’s going on in PADD I with jet, and it’s not sustainable,” said Patrick DeHaan, lead petroleum analyst at GasBuddy. Refiners spent most of 2020 blending excess jet fuel into their diesel pool or refining it further into gasoline as the coronavirus pandemic severely hit air travel. Demand for jet fuel is now about 5% below 2019 levels, according to data from the US Energy Information Administration. But US distillate inventories, which include heating oil and jet fuel, are currently about 20% below the average for the 2015-2019 pre-pandemic period, compared with deficits of 11% in crude and 1% in gasoline.<br/>