Global Jet Fuel Demand Soars, Boosting Oil Prices

Jet fuel demand is rebounding across regions as people have shaken off the pandemic years and are traveling en masse again, with kerosene demand driving global oil demand growth this year.

Total passenger numbers on airlines are set to hit a record high this year, at 4.96 billion, the International Air Transport Association (IATA) said last week in its latest forecast of airline profitability.

“With a record five billion air travelers expected in 2024, the human need to fly has never been stronger,” IATA’s Director General Willie Walsh said.

“Without a doubt, aviation is vital to the ambitions and prosperity of individuals and economies.”

Moreover, the average passenger load factor is expected to be 82.5% in 2024—largely in line with pre-pandemic levels of 82.6% in 2019, IATA noted.

The rebound of air travel is driving global oil demand growth, analysts say.

Jet fuel demand is set to rise by 650,000 barrels per day (bpd) in 2024, compared to last year, according to Simon Warren, an analyst at the world’s largest independent oil trader, Vitol Group.

“Global jet demand is now back at pre-Covid levels, for the first time since 2020,’’ Warren told Bloomberg.

“The recovery has been predominantly led by the short haul sector. Jet is a primary driver of overall oil demand growth,” the analyst added.

Summer holiday travel and pent-up demand in China will drive up jet fuel and oil demand consumption this year, say industry analysts and forecasters such as OPEC.

Goldman Sachs, for example, revised down its oil demand growth estimate for this year, by 200,000 bpd to 1.25 million bpd, but noted it still sees robust global demand thanks to recovering jet fuel consumption.

Brent crude prices are set to rise to $86 per barrel this summer amid strong consumer demand which will put the market into a sizeable deficit in the third quarter, according to Goldman Sachs.

By Charles Kennedy for Oilprice.com

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