LONDON (Bloomberg) - The price of jet fuel in parts of the U.S. climbed back near its most expensive level since the U.S.-Iran war began, once again raising cost concerns for airlines and travelers.
Jet fuel on the Gulf Coast, considered the benchmark region for the U.S., priced at $4.55 a gallon as of Thursday, just over 20 cents off its wartime highs. In New York, it stood at $4.75 a gallon.
A broad-based fuel supply shock is roiling global energy markets, particularly for diesel. Both diesel and jet fuel are “middle distillate” fuels, meaning their prices are closely tied, and marginal diesel output can occur at the expense of jet fuel, and vice versa.
Jet fuel production last week fell to the lowest since early March. Supplies remain high, but are drawing closer to normal seasonal levels, meaning that prices may yet rise further.
In the first months after the US and Israel launched attacks on Iran in late February, jet fuel supplies were considered the most stressed of any refined oil product in the world. That was due to lost Middle Eastern and Asian supplies, along with the comparatively limited amount of storage for the fuel.
Dire warnings emerged in Europe about shortages and prices rose near or over $5 a gallon in New York, Los Angeles and on the Gulf Coast. The crisis pushed up airfares and caused significant strain on airlines, including being a proximate reason Spirit Airlines permanently shuttered in the U.S.
Concerns temporarily eased over the summer during a spike in production. In the U.S., refiners produced more than 2 million barrels a day of jet fuel for 21 consecutive weeks, a rate of output only achieved a handful of times before the war. For long stretches of the summer, U.S. storage tanks held far more jet fuel than they typically do at that time of year while exports also soared.