• European jet fuel supply has tightened sharply following a drop in Middle East Gulf imports, pushing ARA inventories down about 40 percent to multi-year lows.
• Refiners are maximising jet output, but the zero-sum nature of yields is squeezing diesel and other products, shifting rather than solving supply stress.
• Airlines including Lufthansa, KLM and Scandinavian Airlines are cutting capacity as jet fuel crack spreads remain elevated at US$70–80 per barrel.

European carriers are pulling back flight schedules as a tightening jet fuel market drives costs sharply higher, according to new analysis.

The squeeze has been triggered by a steep drop in imports from the Middle East Gulf, with the last pre-conflict cargoes arriving in Europe earlier this month. Since then, the region has been forced to lean heavily on domestic inventories. Stocks in the Amsterdam–Rotterdam–Antwerp (ARA) hub have fallen by around 40 percent since January, sliding to roughly 4.7 million barrels — the lowest level since April 2020.

Refiners are already pushing operational limits. Many plants are running at so-called “max jet mode”, diverting yields toward jet fuel and kerosene at the expense of other products. The shift underscores a structural constraint: refining remains a zero-sum system, where boosting jet output inevitably trims diesel, gasoil and, to a lesser extent, gasoline production. In a market already short across multiple product streams, such optimisation risks simply redistributing supply stress rather than resolving it.

Supply diversification has offered only partial relief. Data from S&P Global’s Commodities at Sea unit shows April and May arrivals into Europe drawing from a wider pool, including Egypt, Nigeria, Singapore, the UAE, and Canada. Even so, replacement barrels have not fully offset the loss of Gulf volumes.

The impact is now visible in airline operations. Lufthansa has announced plans to cancel around 20,000 short-haul flights through October, while KLM and Scandinavian Airlines have also trimmed capacity.

Market signals point to sustained strain. Jet fuel crack spreads are currently trading in the US$70–80 per barrel range, maintaining a premium of roughly US$20 per barrel over diesel. Forecasts suggest elevated pricing will persist through the second quarter, with margins expected to average US$55–60 per barrel — a level likely to keep pressure firmly on airline economics.

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