By Laura Sanicola
Asian jet fuel prices are soaring as supply fears ripple through energy markets following the U.S. strikes on Iran, extending a sharp rally in U.S. refining stocks.
Benchmark jet fuel prices in Singapore -- Asia's key aviation fuel hub -- have jumped dramatically in recent days. Singapore jet fuel swaps are trading around $147 a barrel, according to LSEG data, a sharp move from levels near $90 earlier this winter. At the same time, the Singapore jet-kerosene cash differential -- the premium physical cargoes command over paper swaps -- has also spiked, a sign that buyers are scrambling to secure prompt barrels.
The squeeze isn't confined to Asia. U.S. jet fuel prices at New York Harbor have surged from roughly $105 a barrel on Feb. 27 to about $150 a barrel this week, according to OPIS data.
The surge in jet fuel prices is feeding a rally for major U.S. refiners. Marathon Petroleum is up about 1% on the day and roughly 11% over the past five sessions. Valero Energy has gained about 1.5% today and roughly 12% over the same period, while Phillips 66 is up around 1.7% today and roughly 10% for the week.
Vessels containing crude oil and refined products are backed up behind the Strait of Hormuz, which normally carries roughly a fifth of global oil consumption. Most of the trapped crude oil is medium-sour crude, which produces a higher share of middle distillates such as diesel and jet fuel. If refiners replace that with lighter crude from other regions, they produce more gasoline and less jet fuel, worsening the aviation fuel shortage.
Jet fuel markets are also often the first to react to supply disruptions because inventories tend to be smaller as the fuel requires specialized storage. But in this case, a confluence of other factors is adding to the squeeze.
Asian refiners who cannot get crude oil shipments from the Middle East are cutting runs or bringing forward maintenance as crude deliveries become uncertain, according to Reuters reporting.
Middle East refining capacity is also at risk. Drone strikes earlier this week forced Saudi Arabia's Ras Tanura refinery, which can process about 550,000 barrels per day, to halt some operations. A refinery in Kuwait was also damaged, though officials there said it continued running. Even temporary disruptions can tighten fuel markets because refinery outages often take days or weeks to fully restart and stabilize, especially if equipment inspections or repairs are required.
As a result, China and India are reportedly cutting back fuel exports as well, removing supply from the regional market just as refineries are processing less crude.
Matthew Blair, a refining analyst at Tudor Pickering Holt, wrote today that refining margin indicators have jumped $10 to $12 per barrel so far in March, with the futures curve suggesting margins could remain strong into the second quarter.
The widely watched 3-2-1 crack spread -- a proxy for refinery profitability -- is up 47% from the end of last week to $41.87 on March 4. That's still a far cry from the highs near $60 reached during the Russia-Ukraine war, but is a serious windfall for refiners who were otherwise bracing for a slow first quarter due to seasonal demand weakness.
Certain refiners may be benefiting more than others. Companies with complex refineries or strong exposure to export markets -- such as Valero and Marathon -- stand to capture the widest margins.
So far, West Coast margins have blown out the most. The jet fuel crack at Los Angeles has jumped more than double last week's level to roughly $81 a barrel, according to OPIS data.
This has helped drive gains in stocks who sell products in the region, like PBF Energy and Par Pacific. PBF Energy has surged about 3.5% Thursday and nearly 30% over the past five days, while Par Pacific Holdings has climbed roughly 22%.
Write to Laura Sanicola at laura.sanicola@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 05, 2026 13:40 ET (18:40 GMT)
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