European jet fuel market in freefall after Trump bans travel to U.S.
The European jet fuel swaps market slumped drastically Thursday morning after the White House announced a restriction on travel from Europe, excluding the U.K., in response to the increased spread of the novel coronavirus in the U.S.
The price of the petroleum product dropped as much as 10% compared to Wednesday, and nearly 50% compared to peak prices in early January. European prices were trading at $348.02 a tonne, down 8.3%, by early evening in London, according to data from Bloomberg.
The collapse of Europe’s jet fuel market adds to an already precarious situation for global jet fuel markets, as flight restrictions or bans, dips in bookings and flight cancellations are increasing around the world.
“Without a lifeline from governments, we will have a sectoral financial crisis piled on top of the public health emergency,” said International Air Transit Association (IATA) director-general Alexandre de Juniac.
Norwegian Air announced it would suspend 4,000 flights and temporarily lay off up to half of its workers after its stock plummeted 22% Thursday. Shares of Lufthansa fell 14% while Air France-KLM, one of the most affected European airlines this year, dipped another 13%.
Demand for jet fuel could be curbed by as much as 250,000 barrels per day, split between the U.S. and European markets, during the period of this travel ban, according to Mark Williams, principal analyst at Wood Mackenzie.
Jet fuel is typically a very lucrative product for refiners, providing the best margins for 2019, but is set to have one of its worst years in decades.