Europe's aviation fuel fears ease as new supplies arrive

Europe's aviation fuel supply concerns are easing, with current estimates suggesting no major crisis or significant disruptions to air travel in the coming weeks. This improved outlook contrasts sharply with warnings from last month, when the International Energy Agency (IEA) flagged potential shortages by the end of May.

The situation has significantly improved due to rising aviation fuel prices. This increase incentivized refineries and traders to redirect supplies to Europe, accelerating the replacement of volumes previously sourced from Middle Eastern countries. Ryanair's CEO, Michael O’Leary, confirmed that suppliers expect no disruptions until at least mid-July. He noted that increased deliveries from West Africa, the United States, and Norway are helping to offset reduced supplies from the Middle East, a consequence of shipping disruptions through the Strait of Hormuz.

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suppliers confirmed this week that they do not expect supply disruptions until at least mid-July.

During the initial weeks of the conflict, aviation fuel prices surged past $200 per barrel, more than doubling pre-war levels. However, prices have since fallen to around $162 per barrel. The IEA's latest report indicates increased production in the US and West Africa, with European refineries like Spain's Repsol also boosting output. Despite these gains, the IEA cautioned that increased production has not yet fully replaced supplies that previously transited the Strait of Hormuz. The European Commission has stated it currently sees no fuel shortages but acknowledged potential regional issues if the Hormuz situation remains unresolved. Member states have emergency fuel reserves available for release if needed.

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If the situation in the Strait of Hormuz is not resolved soon, it will take some time for the market to rebalance.