Global jet fuel demand is likely to complete its recovery to pre-pandemic levels in the first half of 2024, despite headwinds from slow economic activity more widely.
Full recovery now rests on China. Asia-Pacific is still recording the widest gaps against pre-pandemic passenger traffic, with demand in revenue passenger-kilometres (RPK) for international travel 19.5pc below 2019 levels in October, according to the International Air Transport Association (Iata).
In other regions international travel activity is comparatively strong, mostly falling short of pre-pandemic levels only by a few percentage points. RPKs between Europe and north America surpassed pre-pandemic levels by 7pc in October, Iata said.
Even without a full recovery in passenger traffic, the aviation sector has recovered financially from the pandemic and is set to expand next year. Iata estimates the global sector's revenues surpassed pre-pandemic levels by 7pc in 2023, reaching $896bn, and forecasts revenues will grow by 7.6pc to $964bn in 2024. The sector is expected to spend $281bn on jet fuel in 2024, up from $271bn in 2023, and fuel consumption is seen at 2.36mn bl in 2024, up from 2.17mn bl.
India is likely to be the biggest contributor to global jet fuel demand growth, having come in behind China and the US as the third largest domestic air passenger market in 2023, according to Iata. Indian airlines have purchased more than 1,200 aircraft in 2023, indicating a significant expansion of regional capacity and possible jet fuel consumption, and the country's airport infrastructure has also been developing. India exported roughly 7.5mn t of seaborne jet fuel in 2023, but that could decline as domestic consumption swells.
Given that a relatively small proportion of India's population are air travellers, the country's jet fuel consumption may have more room to expand than that of China, according to aviation consultancy IBA. Only around one in 10 people in India use air travel as a means of transport, compared with one in three in China.
The sanctions imposed by the EU and UK on Russia had little effect on jet fuel availability in 2023, because Moscow was never a significant supplier to western Europe. But it was a major supplier of diesel, another middle distillate, and tighter diesel supply has tended to lift jet fuel margins as well with complex refineries able to adjust production flexibly between the two products at the margin, although refiners prioritised output of diesel over jet fuel. There may be relief for supply of both products in 2024, as new refining capacity is scheduled to come online in the Middle East.
Kuwait's 615,000 b/d Al-Zour refinery was plagued by unplanned outages in 2023, but after resolving these the site could ramp up crude throughput towards full capacity in the coming months. Al-Zour has supported Kuwait in becoming the world's largest seaborne exporter of jet fuel and Europe's largest source of imports. The country exported around 11mn t of jet fuel by sea in 2023, up from just 5mn t in 2019. A fully functional Al-Zour refinery will cement this position — although any disruption to tanker movements through the Suez Canal could cause short-term supply issues — and will make up for a shift in the UAE's jet supply.
Before the pandemic the UAE was the world's largest seaborne jet fuel exporter, but it has begun to prioritise diesel. The country's seaborne jet fuel exports have declined to around 6mn t in 2023, from nearly 9mn t in 2019, and with state-owned Adnoc solidifying its position in the European diesel market with long-term contracts it is unlikely to pivot back to jet.
