Jet fuel is a critical refined product market directly tied to global passenger and cargo aviation demand, making it a key indicator of economic mobility and international trade activity. It is traded actively across physical and financial markets to manage exposure to volatility in aviation fuel costs.

Market Volatility and Opportunity

Liquidity Energy’s jet fuel brokers have helped clients navigate volatility driven by events ranging from the COVID-19 demand collapse, which grounded fleets worldwide, to the rapid demand recovery and refinery supply constraints that followed. Each cycle in jet fuel markets creates risks for unhedged airlines and logistics operators while offering structured opportunities for sophisticated participants.

Global Jet Fuel Benchmarks

Jet fuel pricing benchmarks include the US Gulf Coast, NY Harbor, Northwest Europe, and Singapore, reflecting the regional dynamics of supply, refining margins, and aviation demand. Understanding the spreads between jet fuel and crude or distillate benchmarks, along with regional arbitrage opportunities, is essential for effective fuel procurement and risk management strategies in the aviation sector.

Physical vs Financial Markets

The jet fuel market operates on both physical and financial layers. Airlines, cargo operators, and suppliers must manage the complexities of physical procurement, delivery logistics, and quality specifications, while financial markets provide risk management tools through swaps, futures, and structured products. Navigating these dimensions requires deep expertise to hedge effectively while ensuring secure, compliant supply chains.

Price Discovery and Risk Management

Jet fuel prices are driven by crude oil fundamentals, refinery runs, regional supply-demand imbalances, and seasonality in air travel. Additionally, geopolitical disruptions and biofuel mandates can significantly impact availability and price structures. Active monitoring and agile hedging strategies are essential for aviation fuel buyers and market participants to mitigate volatility and capture opportunities in rapidly shifting markets.