The Strait of Hormuz is closed. Persian Gulf jet fuel hasn't reached world markets in months. Airlines in Europe and Asia are scrambling for any barrel they can find. U.S. refiners stepped right into the gap. Jet fuel that used to head to Latin America is now flying across the Atlantic instead.
The Persian Gulf was the world's biggest source of jet fuel before the U.S. and Israel hit Iran on Feb. 28, per the IEA. After Iran shut the Strait of Hormuz, those barrels stopped reaching world markets.
Europe felt it first. Roughly 20% of its jet fuel came from the Gulf. Big refiners in China, South Korea, and India ran short too, since most of their crude oil flowed through that same strait.
Tanker loadings of jet fuel were down 50% last week vs. the same week last year, per Kpler. Global jet exports ran 30% below 2025 in April. With supply tight, jet fuel prices in Europe doubled in a year to $187 per barrel, per IATA.
Lufthansa is one of the biggest carriers in Europe. It cut 20,000 short-haul flights through October as fuel costs climbed.
The cuts followed an April 9 warning from the Airports Council International Europe. The group told the EU a "systemic jet fuel shortage" was coming if the strait did not reopen.
European Commissioner for Transport Apostolos Tzitzikostas said in late April there was "no evidence of actual shortages" yet. He flagged that commercial jet fuel stocks were under pressure.
American refiners are filling the void. Valero pushed jet fuel up to 30% of its distillate slate in March, above its usual 26%. Valero COO Gary Simmons told investors "jet is incredibly short" on the firm's April 30 call.
Marathon Petroleum added 30,000 barrels per day of jet capacity at its Garyville, Louisiana refinery. Valero is also set to start jet output at two more refineries that don't currently make it.
The destination map is the real story. U.S. exports to Europe jumped over 400% in April to 94,000 barrels per day, per Kpler. That's a market the U.S. essentially didn't supply before the war.
The grace period is ending, ConocoPhillips CFO Andrew O'Brien said. Tankers that left the Gulf right before the war have already delivered their loads. Commercial inventories are getting drained on the back of that, Exxon CEO Darren Woods told CNBC.
Chevron's Mike Wirth says reopening the strait will take "weeks and probably into months." Mines need to be cleared, and hundreds of ships need to be re-routed. Some import-dependent countries could face critical shortages by June or July, per O'Brien.
Even the U.S. isn't fully insulated. The West Coast got 80% of its imported jet fuel from South Korea last year. Korean refiners are also short on Middle East crude.
Lufthansa's 20,000 flight cuts won't be the last if this drags into peak summer.
U.S. refiners are walking out of this quarter as the supplier of last resort.
