BAKU, Azerbaijan, Sept.9
By Leman Zeynalova – Trend:
Jet fuel prices to decline from current spot prices as the impacts from the Delta variant reduces air travel demand after a steady increase in flights and passengers since the start of the year, Trend reports with reference to Fitch Solutions.
“We anticipate Brent prices to trade sideways at the current levels with limited upside risk and have revised our global average for jet fuel lower to USD75.0/bbl for 2021 from USD77.7/bbl last quarter. Lower oil prices in 2022 will see jet fuel prices decline to USD73.5/bbl with expectations remaining subdued for a rapid rebound air travel and a core view for recovery to take place over the next several years,” said the company.
Fitch Solutions expects Covid-19 restrictions to ease in affected markets although passenger reluctance to travel could see a slower return in aviation. “In addition, the prospects of renewed lockdowns in Asia could see curbs re-imposed given the region’s 'zero tolerance' approach to managing community infections. As vaccination rates rise, we could see this strategy shift to one employed in the US and Europe were restrictions were eased in full at the expense of increased infections. In contrast, with our views of widespread global recovery over the coming quarters, air travel is unlikely to return to pre[1]pandemic levels until well into 2025.”
The re-imposition of lockdown measures in Asia on rising infections has significantly curbed regional travel and will likely further delay a full return of international travel.
“Despite the increase in regional routes reopening in Europe and North America, passenger enthusiasm has plateaued or retreated in Q3 2021 with increasing infections curbing passenger numbers. This bearish tilt is also borne out of the limited upside proposed by oil prices as we at Fitch Solutions have also reduced our outlook 2021 for annual average Brent oil prices this month. On the supply side, refiners continue to effectively manage fuel production keeping fundamentals broadly balanced.We expect spot prices to recede slightly although spreads to Brent to slightly strengthen as refiners keep a lid on excess supply adding some upside, though moderated by the excess capacity in jet fuel. Higher than expected demand for transport fuels such as gasoline and diesel also risks pushing refiner output of jet fuel higher depressing prices further, as demand for aviation is expected to remain muted in the near-term,” said the company.
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