Asia’s jet fuel recovery grounded again by delta flare-ups

Jet-fuel demand in Asia suffered a blow last month as the delta coronavirus variant flared, prompting airlines to cut back on services and forcing local refiners to ship more of the unwanted fuel to the U.S. and Europe.

Airlines across 23 Asia-Pacific nations offered 22.2 million seats in the final week of August, according to aviation-intelligence firm OAG. That’s about half the number at the end of January 2020—- before widespread lockdowns savaged air travel—and the lowest figure since February this year.

The drop-off highlights the fragility of the recovery in energy demand, especially for jet fuel, which has been especially hard hit as many borders remain closed to fight the pandemic. China was among countries caught up in the delta wave, and saw seat capacity drop below 2019 levels, according to Mayur Patel, regional sales director of Asia Pacific and Japan at OAG. 

It’s unlikely there’ll be a significant recovery in international travel in Asia until at least 2022, when double-vaccination rates are likely to reach acceptable levels, according to Patel. “Even then, it is very likely that only those that have been double-vaccinated will be able to travel,” he said.

Amid the slump—which also affected Indonesia and Vietnam—local refiners exported more of the fuel to the Americas and Europe, where less stringent curbs are encouraging a return to air travel. Asian processors and traders loaded 425,000 tons of jet fuel to the Americas in August, the highest volume since September 2019, according to fixture data observed by Bloomberg.

The pick-up in exports has helped offset weaker regional demand, boosting refiners’ margins from producing the fuel. The margin for Singapore jet fuel over Brent was $7.86 a barrel on Wednesday, up from $5.51 at the end of July.