U.S. Refiners Focus on Jet Fuel Production, Raising Concerns Over Summer Gasoline Supply

As the aftermath of the Iran war has tightened global fuel supplies, U.S. refiners are increasingly focusing on jet fuel production. There are growing concerns that this focus on jet fuel by refiners could reduce the proportion of gasoline production, potentially leading to fuel supply shortages during the peak summer travel season.

Reuters Yonhap News

On May 20 (local time), Bloomberg, citing data from the U.S. Energy Information Administration (EIA), reported that U.S. jet fuel production has exceeded 2 million barrels per day for four consecutive weeks. This is the first time the U.S. has produced more than 2 million barrels of jet fuel per day for four straight weeks.

Refiners in the U.S. Gulf Coast region are considered the most sensitive to price changes in the world. To maximize profits, they adjust the production ratio of petroleum products. As the Iran war has shaken the energy market and inventories, these refiners have significantly increased jet fuel production in recent months, as prices have soared. In contrast, the proportion of gasoline in total output has fallen well below the seasonal average.

Natalia Rosada, a researcher at Energy Aspects, said, "U.S. refiners have maximized jet fuel production at the expense of gasoline and diesel output," adding, "As we move into summer, companies will compete to secure a higher share of gasoline production."

In particular, the summer season, which is traditionally associated with increased gasoline demand due to road trips, is approaching. If U.S. refiners further increase the proportion of gasoline production, the output of other essential fuels, such as jet fuel and diesel, would inevitably decrease. Bloomberg noted that in such a scenario, the price of the fuel with the strongest demand in the market could rise even further.

Meanwhile, U.S. gasoline inventories have fallen to their lowest level since 2014. In contrast, gasoline refining margins are around $50 per barrel, the highest since the peak of the 2022 energy crisis. This indicates that the market is demanding an increase in gasoline supply.

Eugene Lindell, head of refined products at consulting firm FGE NexantECA, said, "It essentially becomes a bidding competition. Currently, gasoline has the upper hand, but eventually, jet fuel could offer higher prices and take the lead."

Andy Lipow, president of Lipow Oil Associates, said, "Refiners will produce the most profitable products," adding, "As a result, even if gasoline output decreases, the refining industry has no other choice."

The decisions made by U.S. refiners in the coming months are also expected to impact Europe. According to Vortexa data, the European Union (EU) and the United Kingdom, which have traditionally imported large volumes of diesel and jet fuel from the Middle East, have recently increased imports from the U.S. Gulf Coast. Bloomberg explained that if supplies from these sources shrink amid ongoing tensions in the Middle East, it could also pose a risk to the European fuel market.

This content was produced with the assistance of AI translation services.