IEA Ties Diesel Relief to Gulf Exports. Jet Fuel Depends on the Same

The International Energy Agency’s (IEA) October Oil Market Report focuses on diesel, but its warning extends to airlines as well. According to IATA, jet fuel prices are now lowest in the Middle East and highest in Europe.

The IEA said on 14 October that the market for gasoil, which includes diesel, will stay tight “well into 2027”. The balance, it said, “is dependent on a recovery of product supply from the Middle East”. Jet fuel gets only a passing mention, though the same Gulf exports decide its supply.

Winter Pivot: Refiners Turn to Diesel

Refiners draw jet fuel and diesel from the same middle cut of crude, and more of one normally means less of the other. The IEA’s report shows the trade-off at work: “tight jet fuel markets this summer encouraged refiners to maximise kerosene production, thereby reducing gasoil yields.”

Infographic explaining the shared refined source for jet fuel and diesel.
While diesel and jet fuel come from the same refined source, international policies often focus heavily on diesel while overlooking jet fuel supplies.

Diesel Gets Priority in Emergency Stock Draw

On 2 October, the G7 countries committed to releasing 100m barrels of emergency stocks over four months, including a significant amount of diesel in the first 20 days. Its statement does not mention jet fuel or kerosene. EU law lets member states count jet fuel towards their emergency reserves but does not require them to hold any.

Chokepoints and Surging War-Risk Premiums

Refined product and LPG shipments from the Middle East “have risen much slower than crude oil flows and remain below half of their pre-war levels”, the IEA said. Refined product exports went from 4.7m barrels a day before the war to 1.9m in September.

Jet fuel shows the bottleneck sharply. From 13 September to 5 October, no tanker carrying jet fuel passed through the Strait of Hormuz, according to Vortexa, a cargo-tracking firm. Jet fuel loaded west of the Strait fell from 420,000 barrels a day a month earlier to 140,000 in the two weeks to 5 October.

Map of the Gulf and Red Sea marking Hormuz, Gulf loadings and Yanbu; jet fuel $165 a barrel in the Middle East, $203 in Europe
No tanker carrying jet fuel crossed the Strait of Hormuz between 13 September and 5 October; Middle East jet fuel cost $165 a barrel, against $203 in Europe and the CIS. Map: Aljaweea, sources: IEA, Vortexa, Platts, IATA, Reuters

Since 1 April, Platts has priced clean refined products loaded inside the Strait separately from those loaded outside, jet fuel among them. Zawya reported that the gap reflects shipping risk: insurance, freight and delays. A senior industry analyst Zawya cited, estimated the diesel gap to be $38 a barrel.

The Red Sea route has its own challenges. By 25 September, quoted war-risk premiums for Saudi-linked tankers at Yanbu had risen to about 3% of a vessel’s value, Reuters reported. Tankers with no Saudi link paid 0.2-0.3%.

Airlines in the Red Despite Low Gulf Prices

In the week to 9 October, jet fuel in the Middle East averaged $165 a barrel, the lowest of IATA’s six regions. Europe and the Commonwealth of Independent States paid $203, the highest.

Dot chart: jet fuel prices in six IATA regions roughly doubled from the 2025 average; the Middle East rose least, from $84 to $165
Jet fuel has roughly doubled in price in every IATA region since 2025; the Middle East rose least, by 97% to $165 a barrel. Chart: Aljaweea, source: IATA

However, the region’s lower prices are not expected to keep the region’s airlines out of the red. On 7 June, IATA forecast a net loss of $4.3bn for Middle East carriers in 2026, the only region in loss. It listed “relatively secure access to fuel supply” among the region’s strengths. In August, Middle East carriers’ traffic fell 14.6% year on year.

“I think jet fuel keeps me awake,” Antonoaldo Neves, Etihad’s chief executive, told Gulf News on 14 September. Qatar Airways’s chief executive, Hamad Al-Khater, said on 23 September that passing on fuel costs would be “an option of last resort”.

What to Watch

The IEA’s next Oil Market Report is expected in mid-November. Arab airlines meet in Doha on 2-4 November for the annual general meeting of the Arab Air Carriers Organization, chaired by Mr Al-Khater. For jet fuel, the indicator to watch is the movement of shipments through the Strait of Hormuz.

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