How is Coronavirus Impacting Jet Fuel Price & Demand?

Since the beginning of 2020, the rise in coronavirus cases has led to a tumbling state of global stock markets. The decline has been worst seen in the oil prices over the past some years, which in turn has lowered the demand for jet fuel to a massive extent. 

The global demand for the jet is likely to witness a sharp decline by up to 70% especially in the second half of 2020. The reason behind this statistic is the growing number of countries applying travel quotas for stopping the spread of novel coronavirus. 

Commenting about the present state, Cuneyt Kazokoglu, the director of Oil Demand at the FGE said, “This trend of decrease in the number of flights will directly impact jet fuel consumption. We forecast that global jet fuel consumption could fall by up to 70% in the second quarter of the year”. Drawing attention towards the lowering of oil consumption since coronavirus is expected to continue lowering the demand for jet fuel. "Global jet fuel demand corresponds to 8% of the world’s daily oil consumption. Even if global jet fuel demand falls by 50%, this corresponds to 4% of oil demand, or 4 million barrels a day," Cuneyt said.

Let us look into the effect of coronavirus pandemic in nationalities across the globe. 

Jet fuel market in the Asia region have suffered heavily since February with a number of airlines have suspended their flights in the affected areas. Also, the cancellation rate of travelers due to the spread of coronavirus is on a sharp rise. In Singapore country itself, the drop in jet fuel demand has given birth to aviation fuel prices lowering to over 30%. As a result, the refining profits in Asian regions have lowered by over 50%. 

With coronavirus cases has spread to over 77 countries globally, the impact of the virus on the jet fuel continues to rise. In February itself, the demand for aviation fuel in Asia had lowered to 740,000 barrels per day (bpd) – a number that continued to worsen in the coming months.

The drop-in jet fuel price in the US has gone a new low in the past five years. In January, the travel limitations imposed on multiple parts of the globe led to a fuel demand which brought a 20% decline in aviation fuel in the US.

In China, corona fears have led to the cancellation of more than two-thirds of its international flights. Aviation fueling or jet fuel, which is considered one of the biggest expenses in the aviation industry, has gone down sharply. The fuel demand fears have led to sharp prices drop of jet fuel. Airlines in China are estimated to lose over $12.8 billion in revenue due to the coronavirus outbreak.

With a number of European nations getting affected by a coronavirus, the travel limitations imposed on European travel continues to expand. Because of this, the demand for aviation fuel has dropped by over 70% which accounts for over 1 million barrels every day. There’s another side of this sad story in the European region: Ghost flights wasting fuels and hiking the fuel demand. 

Because of the coronavirus fears, a number of airlines have started flying empty flights otherwise they risk losing their airport slots. These flights are known as ghost flights. Going by the European rules, if an airline doesn’t use an 80% allocated flight, they might have to let go of the airport slots. As a result of this rule, several airlines have started wasting aviation fuels flying around the airports. These flights are not just wasting jet fuel but are also hurting the environment.

Associate with a platform like NOZL that offers a jet fuel card. There are a number of benefits that a jet owner can avail from it:

The crux of the present condition of aviation fuel demand and price is that it is operating inversely with the growing coronavirus cases. But it is also showing signs of revival, meaning if the jet owners make the right move, they will be able to make the most of the current market standing.