South Korea Steps Up as Europe Faces Jet Fuel Shortage Amid Middle East Crisis

South Korea's jet fuel exports reached their highest level in three and a half years in July, driven by a surge in demand from Europe. The shift comes as Europe faces supply disruptions due to the blockade of the Strait of Hormuz and damage to Middle Eastern refining facilities following armed conflict between the United States and Iran. According to the Korea National Oil Corporation, July exports totaled 10.81 million barrels, the highest since February 2020, when the U.S.-Iran military conflict began. August exports slightly decreased to 10.13 million barrels but were still up 5.4% year-over-year.

Europe, which historically relies on Middle Eastern oil producers for over 70% of its jet fuel imports, has turned to South Korea as an alternative. Data from the Korea Petroleum Association shows jet fuel exports to Europe surged by 115.2% in the January-August period compared to the same period last year. This growth far outpaced the 13% year-over-year increase in South Korea's total jet fuel exports, highlighting Europe's growing dependence on South Korean supplies.

The supply-demand imbalance in Europe is expected to persist, with Energy Aspects forecasting a jet fuel supply-demand gap of 510,000 barrels per day in the fourth quarter. This contrasts with projected supply surpluses in the United States and Asia-Pacific regions. Tight inventory levels further exacerbate the situation, with independently held jet fuel stocks at the Amsterdam-Rotterdam-Antwerp hub at their lowest in seven years as of September 10.

Industry sources attribute Europe's struggles to aging refineries and blocked imports from both Russia and the Middle East. South Korea's large-scale production capacity and stable supply make it a preferred alternative. If Middle East geopolitical risks continue, South Korean refiners could further expand their exports, given their long-haul shipping capabilities and refining infrastructure.