Jet fuel costs have jumped back toward the peaks reached after the US and Israel began strikes on Iran in late February. On Thursday, the Gulf Coast benchmark printed $4.55 a gallon, a little more than 20 cents below those wartime highs, while New York was at $4.75. Refiners cut back, with last week's jet output the lowest since early March. Storage remains above average, but levels are sliding toward normal for this time of year, leaving room for further price firming.
A broad fuel supply shock is rattling global energy markets, and diesel is bearing the brunt. Because diesel and jet are both middle distillates, their prices move together, and squeezing more diesel out of a refinery can mean less jet fuel, and vice versa.
In the months right after the late-February strikes on Iran, jet fuel was viewed as the tightest refined product worldwide, as flows from the Middle East and Asia fell and limited storage for jet compounded the stress. Severe warnings surfaced in Europe about shortages, while New York, Los Angeles, and the Gulf Coast saw prices push to around or beyond $5 a gallon. The crunch lifted airfares and put airlines under heavy strain; it was cited as a proximate factor in Spirit Airlines' permanent shutdown in the US.
As summer progressed, US refiners pushed throughput to sustained highs, with jet fuel production exceeding 2 million barrels per day for 21 consecutive weeks - an intensity seen only rarely prior to the war. For long stretches, US tanks held far more jet than typical for the season, and exports surged.
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Jet and diesel tend to move together, and refiners juggle one at the expense of the other. With production dipping and inventories normalizing, fuel costs could stay jumpy, which can filter into airfare and travel budgets even if you are not flying often.
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