U.S. East Coast Jet Fuel Costs Soar On Shortage Fears

• Jet fuel prices are soaring on the U.S. East Coast, home to some of the world's busiest airports, with buyers anticipating a worsening shortage as supply dwindles amid sanctions on Russian energy exports. 
• Following Russia's Feb. 24 invasion of Ukraine, the United States and allies slapped heavy sanctions on Russian industry, leading to a tightening in worldwide energy markets. Russia is the world's largest exporter of crude and petroleum products, and the supply crunch is filtering through to global markets. 
• The East Coast largely relies on shipments on the Texas-to-New Jersey Colonial Pipeline for refined products, as well as imports from Europe. However, Europe is dealing with its own supply strains, so distillate exports to the U.S. East Coast - also known as PADD 1 - are down nearly 60% on a year-on-year basis, according to Refinitiv Eikon data. 
• East Coast jet fuel costs have reached record highs in recent days, with spot prices in New York Harbour exceeding $6.60 per gallon on Friday, more than double the seasonal average, according to data from oil traders citing OPIS and S&P Global Commodity Insights. 
• The surge in fuel costs and other supply shortfall worries are currently slamming air carriers and travellers with steep cost increases just as air travel was starting to recover from COVID-19 restrictions. If this is sustained, some travellers may be deterred from making leisurely trips, which could adversely impact tourism recovery in the Caribbean.

(Source: Reuters)