September Pricing Analysis - European Jet

SUMMARY

Jet CIF NWE averaged $1,554.05/MT in September (+21.5% MoM, +113.3% YoY), the highest monthly average in the 13-month series, edging April's $1,552.95. W3 was the breakout week (+7.3% WoW) after strikes on Saudi Arabia's East-West pipeline on 10-Sep halted Yanbu loadings and led to canceled Saudi crude cargoes for European refiners. The move was jet-specific: the Regrade swung from -$12.35/bbl to +$2.01/bbl, the crack vs Brent averaged $94.66/bbl (+27.5%), and physical bids outnumbered offers 74:15, led by BP Oil International. NWE-Singapore more than doubled to +$218.25/MT as Europe paid a long-haul premium to pull South Korean barrels. The LSGO front eased into month-end (M1-M2 +$74.50 to +$51.00/MT) while M1-M12 held near +$450/MT and the jet half-daily structure deepened to a -1.49 average, leaving the physical prompt tighter than the futures front. The October setup turns on the Yanbu bypass timeline and 900kt of scheduled Asian arrivals against the seasonal drop in aviation demand from November.

MARKET ACTIVITY

• CIF cargo bids swamped offers 54:3 as BP and TOTSA chased cargoes; the derivative complex flipped back bid-heavy
• Physical (FOB Barges + CIF Cargoes) went from 43 bids/35 offers in August (1.23) to 74 bids/15 offers in September (4.93); the shift sat in CIF cargoes, from 15 bids/18 offers to 54 bids/3 offers, while barges moved from 28/17 to 20/12; executed physical trades fell from 17 to 12
• The CIF Cargoes vs LSGO diff complex reversed from 130 bids/181 offers (0.72) to 125 bids/95 offers (1.32); Unipec's derivative offers fell from 33 to 7, unwinding August's surge and confirming it was intermediary positioning rather than flow
• BP Oil International led the bid on both legs:
  • Physical bids rose from 23 to 44, 33 of them on CIF cargoes; BP was the buyer in 8 of the 12 physical trades and the seller in 2
  • Derivative offers collapsed from 38 to 7 while derivative bids rose from 20 to 32; BP bought in 5 derivative trades and sold in 1
  • Bid-led activity from an integrated major's trading arm is the coverage signal, coinciding with Saudi crude cancellations to European refiners from late September
• TOTSA TotalEnergies bid CIF cargoes 12 times after none in August, while selling barges (8 offers, 6 trades); buying imported cargoes against selling domestic barges is intermediary positioning on the cargo-barge spread
• Gunvor SA's physical offers, all CIF cargoes, fell from 5 to 0 and it bid cargoes 5 times, buying 1 from BP; on the derivative leg its offers rose from 13 to 20 and bids from 13 to 18
• KLM sold FOB barges (2-4kt, CCM-priced), both months, two trades each; September sales cleared at CCM +$25.50/MT and +$26.00/MT vs +$1.50/MT and +$4.25/MT in August, so the airline reduced barge length into a firmer domestic market

PRICE ACTION

Jet CIF NWE rallied 21.5% MoM to the highest monthly average in the 13-month series; W3 broke out on the Yanbu outage

• Averaged $1,554.05/MT vs $1,278.89 in August (+21.5% MoM), $728.56 September 2025 (+113.3% YoY)
• Opened $1,447.75/MT (1-Sep), closed $1,592.25 (30-Sep), +10.0%; high $1,714.25 (15-Sep), low $1,421.75 (4-Sep); range $292.50/MT, 58% wider than August's $185.25
• Largest move: +$117.25/MT (+7.3%) on 15-Sep, following +$85.00 on 10-Sep, the day of the pipeline strike; two sessions delivered most of the month's gain
• The W4-W5 giveback (-4.5%, then -1.6%) left the close $144.50 above the open; the market retraced only part of the W3 move

CROSS-MARKET DYNAMICS

• Regrade flipped positive as jet outran diesel, while the crack vs Brent expanded 27.5%
• Regrade averaged -$4.24/bbl vs -$10.18 in August, opening at -$12.35 and closing at +$2.01, reversing August's diesel-led widening; jet outpaced diesel even as the Yanbu outage removed around 200kbd of Yasref diesel output (Kpler), so the move was jet-specific tightening rather than diesel weakness
• Jet-LSGO diff averaged +$34.29/MT before the Sep-to-Oct roll (1-9 Sep) and +$114.20/MT after it (10-30 Sep), peaking at +$146.25 on 15-Sep and closing at +$128.25, more than double August's +$54.50 close
• Crack vs Brent averaged $94.66/bbl vs $74.25 (+27.5%), peaking at $108.95 on 15-Sep, the same session as the flat-price high; with Brent opening above $108/bbl on 14-Sep on Red Sea escalation, jet still outran crude
• The pipeline outage stopped Yanbu crude loadings from 11-Sep, removing the main route for Saudi supply to Med and NWE refiners that avoids Hormuz and Bab el-Mandeb; Saudi crude cargoes to European refiners were canceled from late September through November, putting feedstock risk on regional refinery runs

CROSS-REGIONAL DYNAMICS

• NWE-Singapore premium doubled to +$218.25/MT as Europe paid up for South Korean barrels; NWE-USGC closed the arb
• NWE-Singapore averaged +$218.25/MT vs +$103.50 in August (+110.9%), peaking at +$321.28 on 10-Sep and closing at +$263.65 vs August's +$179.54 close
• The premium is funding a long-haul flow shift: Asia-Pacific shipped 1.31Mt of jet to Europe in July-September, with South Korea around 87%, and September European imports ran at around 672kbd, with South Korea, Nigeria and the US supplying around 60% (Kpler)
• NWE-USGC averaged +$6.21/bbl vs +$4.18, but fell to -$9.62 on 29-Sep and closed at +$0.23, below the $8-12/bbl freight hurdle; the Transatlantic arb was shut at month-end

CURVE STRUCTURE

LSGO front spreads eased from the 11-Sep peak while M1-M12 held; the jet prompt structure deepened against the futures front

• M1 gained $45.25/MT over the month vs M12 +$47.50; front spreads narrowed while M1-M12 was flat
• The curve peaked on 11-Sep, the day after the strike, at M1-M2 +$83.75 and M1-M12 +$476.75; both had unwound by month-end
• The back end holding near +$450/MT matches the IEA's September view that disruption in the Gulf and Bab el-Mandeb delays full Middle East supply recovery to 2027
• Jet half-daily structure averaged -1.49 vs -0.72 in August, hit a low of -1.89 on 24-Sep and closed at -1.66; the barge structure closed at -2.03 vs -1.50; the jet prompt tightened even as the LSGO front eased
• Assessed vs implied moved from -$35.66/MT (9-Sep) to +$13.15 from 10-Sep and held there through 29-Sep on thin competitive cargo activity, with physical cargo priced above paper after the strike vs an August average of -$19.21

PRICE VOLATILITY

September CV held near August's low at 4.89% despite a 58% wider range

• CV rose only 0.29pt as the range widened from $185.25 to $292.50/MT: the rally came as two step-changes (10-Sep and 15-Sep) followed by a plateau, not as daily swings
• Barges CV (5.50%) ran above CIF for the first time in the six-month window; Barges' +$121.00 on 10-Sep outpaced CIF and briefly put Barges above Cargoes
• Position sizing calibrated to a 4.6-4.9% CV underestimates gap risk: two sessions (+$85.00 and +$117.25) moved more than the entire W1 range

SOMETHING TO WATCH

• Yanbu bypass timeline as the feedstock catalyst:
  • Observation: no crude loaded from Yanbu after 11-Sep; Kpler expects a bypass to restore around half of exports within a month, with full repairs taking four to six weeks
  • Why it matters: Saudi crude cancellations to European refiners run through November; a restart removes the feedstock premium in the $94.66/bbl crack, while renewed attacks on the bypass extend the outage into months
  • What to monitor: Yanbu loadings (Kpler, Vortexa); Aramco cargo notices to European term buyers
• Regrade as the jet-diesel canary:
  • Observation: closed at +$2.01/bbl, from -$12.35 at the open
  • Why it matters: holding above zero confirms jet-specific tightness leading the distillate pool; a return below -$5 signals diesel reasserting
  • What to monitor: daily Regrade close; Insights Global ARA jet stocks (Thursdays)
• Asian arrivals vs the November demand step-down:
  • Observation: NWE-Singapore closed at +$263.65/MT, with 900kt of jet from South Korea and elsewhere in Asia scheduled into Europe (Kpler)
  • Why it matters: arrivals land as European aviation demand drops from November; NWE-Singapore compressing toward August's +$103.50 average would signal the arb pull is satisfied and the prompt structure normalizing
  • What to monitor: weekly Asia-Europe jet arrivals (Kpler); daily jet half-daily structure print

Note: All figures, prices and market activity referenced in this report are based on the period covered by this monthly update.