The global jet fuel demand outlook is under pressure from the emergence of the coronavirus Omicron variant, which has prompted many countries to either partially or entirely close their borders. Jet fuel consumption has been the slowest to recover compared to other refined products. The International Energy Agency had expected jet fuel demand to see the strongest rebound of 550,000 bpd to 5.9 million bpd in the fourth quarter of 2021. However, this forecast was released in mid-November before the World Health Organisation designated Omicron as a variant of concern.
Since then, Israel and Japan have already banned the entry of all foreigners. Hong Kong expanded its entry ban for non-residents from some countries. Australia and the UK have tightened requirements for all arrivals to keep Omicron at bay. These renewed travel bans have forced would-be travellers to reconsider their trips.
The benchmark margins from producing jet fuel in Asia slumped to $6.92 per barrel on Monday, their lowest in more than two months. Analysts expect flight restrictions during the winter to significantly lower the world’s jet fuel consumption. Goldman Sachs noted that global jet fuel demand is currently just 1 million bpd above last winter. The investment bank said that in a worst-case scenario, demand could retreat to last winter’s levels.
Global airliners, which have been struggling to recover from last year’s rout, are now scrambling to limit Omicron’s potential impact on their networks. Aviation data firm OAG said 2.4% of scheduled capacity had been removed globally for the upcoming four months. A jet fuel trader said hopes for a speedy demand recovery were no more after Omicron.
