BAKU, Azerbaijan, February 18. According to BMI, a Fitch Solutions company, jet fuel prices are expected to face a downward trend in 2025 due to concerns over an oversupply in the market and a slowdown in demand growth, Trend reports.
Despite a modest uptick in prices earlier this year, where jet fuel spot prices reached $95.65 per barrel in mid-February, the outlook for the rest of 2025 remains bearish. This price increase, attributed to additional sanctions imposed on Russian oil exports by the outgoing Biden administration, temporarily inflated jet fuel prices in January. However, BMI maintains that the fundamentals of the market will lead to a decline in jet fuel prices by the end of the year.
BMI has adjusted its 2025 forecast for jet fuel prices to $93.4 per barrel, which marks a 7.8% decrease from the $101.3 per barrel forecast for 2024. The primary drivers behind this adjustment are oversupply concerns and the anticipated softening of demand growth. While there was a short-term price surge driven by political and economic factors, BMI's forecast reflects a broader trend in global energy markets that includes a tightening of economic conditions and the addition of new refining capacity. This oversupply in the jet fuel market is expected to persist in the near term, creating downward pressure on prices.
The global refining capacity is also expected to continue expanding, which is contributing to this oversupply. As new refineries come online, the growth in refining output will likely exceed the pace of global consumption. BMI anticipates that this imbalance will be felt throughout 2025 and beyond. The company’s analysts predict that the continued oversupply of refined products will exert significant downward pressure on jet fuel prices, particularly as demand growth in the aviation sector slows. Despite strong passenger numbers in 2024, the rate of increase in fuel demand has been lagging behind the increase in air traffic, further exacerbating the oversupply.
Furthermore, BMI’s projections for the coming months suggest that the volatility seen in early 2025 will not be enough to reverse the long-term trend. As geopolitical tensions and economic slowdowns persist, the demand for air travel may not be sufficient to absorb the growing stockpiles of jet fuel. This will likely result in a sustained period of lower prices, which will continue to put pressure on refining margins and dampen any potential price rallies.
Follow the author on X: @Lyaman_Zeyn
