We outlined the early signs of global demand destruction and worsening energy chaos in a note earlier on Monday, mapping the regional dominoes and the order in which they are likely to fall. Turning to the UK, the last known jet fuel shipment from the Middle East is due to arrive later this week, a major warning that aviation disruptions could soon materialize.
The Financial Times reports that the Libyan-flagged Maetiga vessel, loaded with jet fuel from Saudi Arabia, is set to dock in the UK on Thursday.
Maetiga is currently transiting off the coast of Portugal.
"No other UK-bound cargoes from the region are visible on the water, given the blockage of the Strait of Hormuz," the FT noted.
The UK has heavily relied on jet fuel transiting the Hormuz chokepoint for several years after phasing out Russian supplies. Analysts warn that airlines may begin to feel the supply crunch in late April if disruptions in Hormuz persist.
As of Monday, northwest European jet fuel prices were roughly double prewar levels. In Asia, Singapore kerosene is trading at more than $200 a barrel, more than double the level at the start of the year.
"Market understanding is that fuel shortages are not far away in some countries," and "higher prices are to trickle through the entire supply chain and will be felt by all," Janiv Shah, vice-president of oil markets at consultancy Rystad Energy, told the outlet.
According to UBS, a shortage of jet fuel in Asia, along with very high prices for what is available, is now leading to more flight cancellations.
As we noted in "Global Demand Destruction: Subsidies, Empty Gas Stations, Rationing, Flight Cancelations, Export Limits, Price Controls," the regional order in which the energy chaos unfolds is Asia first, then Africa and Europe, before reaching the US, mostly California.
Via JPMorgan:
Europe sources a shocking amount of jet fuel through the Hormuz chokepoint, upwards of 40%, and the UK is especially exposed, both directly and through imports routed via the Netherlands and Belgium.
Lars van Wageningen, research and consultancy manager at data provider Insights Global, pointed out that supply chains are not broken just yet but are being reshuffled, indicating that European buyers will seek additional jet fuel supplies from refineries in West Africa and the US.
Two weeks ago:
Deutsche Bank and UBS have warned for weeks:
The UK government has told travelers not to worry yet, which is usually the moment to start worrying. Energy shocks do not hit everywhere at once. As we point out, first through Asia, then into Africa, Europe, and eventually onto the US West Coast.