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The Iran-Israel war has raised European diesel and jet fuel prices to the highest levels in 15 months as traders worry about potential disruptions to exports from the Middle East.
Since hostilities flare up last Friday, Argus market price data shows diesel premiums on crude have skyrocketed 60%, while jet fuel has risen 45%.
The rally reflects concerns that a suspension of shipments from the Bay, a key source of European fuel, could bolster supply ahead of the peak summer travel season.
While international benchmark Brent Crude won around 9% to under $77 per barrel during the same period, analysts said the global oil market is still supplying and Israel is escheating Iran’s oil export infrastructure.
The sophisticated fuel prices underscore Europe’s dependence on Middle Eastern imports. “This is one of the most dramatic weekday jumps each week,” said George Maher-Bonnett of Argus, a price reporting agency. “All of a sudden these margins exploded.”
He warned that the issue of the Strait of Hormuz, a key chokepoint for oil, gas and sophisticated fuel exports from the Gulf, will affect diesel supply in particular in Europe.
Last year, more than a fifth of imported road diesel came from the EU, the UK, Norway, particularly Saudi Arabia, Kuwait and the United Arab Emirates.
The bay was also responsible for more than half of European imported jet fuel, according to figures from Data Company Kpler. Other countries selling the two fuels to Europe include the US, India and Türkiye.
The UK is particularly exposed, importing a third of diesel and two thirds of jet fuel last year.
On Thursday, jet fuel traded at a premium of nearly $27 per barrel against Brent crude, with diesel costing nearly $29 per barrel more than Brent. Maher-Bonnett said it will take several weeks for consumers and airlines to feel the high prices as many companies implement hedging strategies.
In contrast, European gasoline margins have been weakened due to lukewarm demand both domestically and in major export markets such as the US, Canada and Nigeria.
The opening of the Dangote refinery in Nigeria, the second largest market for European gasoline exports, had a major impact. “We’ve seen export levels (to Nigeria) be cut in half,” says Maher-Bonnett.
