Key facts
- US jet fuel output is increasing due to disruptions from the US-Iran war and biofuel blending mandates.
- Higher costs for Renewable Fuel Standard (RFS) compliance make jet fuel production more attractive than diesel.
- US jet fuel exports have surged, driven by global supply disruptions and increased refinery output.
- Several refiners are expanding their jet fuel production capacity.
- US jet cracks have strengthened significantly year-on-year.
US jet fuel output is experiencing a significant boom, driven by both geopolitical disruptions and domestic regulatory economics. The ongoing conflict between the US and Iran has curtailed global supply and increased prices, prompting US refiners to maximize jet fuel production. This push is further incentivized by the higher costs associated with meeting the US' Renewable Fuel Standard (RFS) for road fuels.
Refiners face increased compliance costs for blending biofuels into road fuels, as indicated by record-high prices for Renewable Identification Numbers (RINs) and Renewable Volume Obligations (RVOs). Since petroleum-based jet fuel is not subject to the RFS, refiners with flexible distillate yields are choosing to prioritize jet fuel production over diesel.
This shift has led to a substantial increase in US jet fuel exports, particularly from the Gulf Coast, at a time when global supply remains constrained by disruptions in key transit areas like the Strait of Hormuz. US jet fuel exports have more than tripled year-on-year, despite overall inventories remaining slightly above year-earlier levels.
Refiners are doubling down on jet fuel production, with several companies undertaking capacity expansions. HF Sinclair, Phillips 66, and Marathon have all made or are planning significant investments to increase their jet fuel output capabilities. This strategic focus on jet fuel is expected to continue in the near term, supported by strong margins and arbitrage opportunities to Europe.