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Competition Hot to Send Europe Jet Fuel After Saudi Attacks

Jeffrey Bair and Jack Wittels
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Competition Hot to Send Europe Jet Fuel After Saudi Attacks

(Bloomberg) -- Europe needs jet fuel and suppliers are snapping up barrels to send over.

Nations, including the U.S., are showing interest in shipping cargoes to Europe to offset supply lost by the attacks on Saudi Arabia’s key Abqaiq crude-processing plants earlier this month. Interest in exports from the U.S. is also pushing up prices in cash markets in the Gulf Coast refining hub.

“U.S. Gulf operators are certainly stepping in to fill the void, as I imagine are Russia operators,” said Ashley Petersen, an oil analyst at Stratas Advisors.

Gulf Coast jet fuel rose to 5.63 cents under Nymex diesel futures Friday morning from 8.13 cents the day before the Sept. 14 drone strikes, data compiled by Bloomberg show. Last fall, jet fuel traded at more than 13 cents under futures.

Ships carrying distillates eastward Thursday include the Twinkle Star from Houston Ship Channel storage and heading for the Mediterranean, as well as Lara from Meraux, Louisiana and Ugale from the public dock at Port Arthur, Texas, which are both signaling Amsterdam, Bloomberg data show.

Replacing Barrels

Indian jet is also being sent to Europe. The Gulf Crystal signaled Europe with jet fuel, and an additional ship with that cargo, the Nave Rigel, was heading to Gibraltar.

The length of the European shortfall in jet should not be a problem, said Alex Kavouris, senior oil analyst at Facts Global Energy in London. European buyers are trying to replace about 100,000 barrels a day in jet fuel, and Russia and the U.S. will compete for that business, he said.

Plus, Saudi Arabia is recovering faster than expected from the biggest attacks ever on its oil industry. Saudi Aramco has boosted total production capacity -- how much it can physically pump -- to more than 11 million barrels a day, according to people with knowledge of the situation. Actual crude output had recovered to more than 8 million a day this week, according to other people who were briefed on the situation.

“It does seem that Saudi refinery runs are heading back to normal now, so any deficit in Saudi jet fuel supplies should be pretty short-lived,” Kavouris said.

(Updates fourth paragraph with Friday morning jet fuel price.)

To contact the reporters on this story: Jeffrey Bair in Houston at jbair4@bloomberg.net;Jack Wittels in London at jwittels1@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Christine Buurma

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