Jet Fuel Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Jet Fuel Category Overview

The jet fuel category is anticipated to grow at a CAGR of 8.4% from 2023 to 2030. The category is mainly driven by the rising focus on clean jet oil and the growing demand for air transportation services. Additionally, factors such as tightened supplies of crude oil (the U.S. stockpiles, and rising production cuts by OPEC countries) impacted the crude oil prices which is the raw material of jet fuel. Environmentally friendly aviation fuels of superior quality play a crucial role in minimizing CO2 emissions. Sustainable jet fuels exhibit emission levels in transportation, combustion, production, and distribution that are about 75% lower than those associated with fossil jet fuel. Sustainable aviation fuel (SAF) produced from municipal solid waste, woody biomass, and other feedstocks can significantly contribute to low CO2 emissions. Adoption of renewable oil results in a significant reduction, up to 90%, in hazardous particle emissions and a complete elimination of sulfur emissions.

The global category price was around USD 131.02/bbl in the last week of September 2023. According to the IATA Jet fuel price index, prices of the category have steadily declined in the quarter ended September 2023 as compared to the first quarter of 2023. The prices were down due to excess supply of jet fuel which was due to a production hike at the start of the year owing to the anticipation that demand would increase in the future. However, the demand has been stable but not in line with the supply surge. The possibility of a prolonged Russian ban on motor fuel exports, leading to a diesel shortage, boosted jet fuel prices in Europe. This situation could prompt refiners in the East of Suez region to prioritize diesel production over jet fuel.

The U.S., China, India, and Russia are the top jet oil-producing countries in the world. In July 2023 the U.S. output of the category was around 1,773.8 thousand barrels per day. India which is one of the best-sourcing countries for the category exported 208,433 barrels per day of aviation fuel as of June 2023. The global average export volume was 1.58 million barrels per day during Jan – Sept 2022, however, it went up to around 1.85 million barrels per day in the fourth quarter of 2022. Throughout 2022, there was a gradual demand recovery.

Sustainable aviation oils derived from renewable biomass and waste resources have the capacity to match the performance of conventional jet fuel made from petroleum, while significantly reducing the carbon footprint. This offers airlines a strong foundation for separating flight-related greenhouse gas emissions, marking a significant step towards environmental sustainability. Companies are continuously taking the initiative to produce eco-friendly fuels. For instance, in May 2023 Honeywell International announced new technology to produce lower-carbon aviation fuel from carbon dioxide and green hydrogen captured from industry, which would result in reduced greenhouse gas emissions from aviation.

Airlines are the primary buyers of the category in the industry. The bargaining power of buyers is moderate to high as airlines often negotiate with multiple suppliers to secure the best prices. However, the availability of substitutes is limited, and fuel is a significant portion of an airline's operating costs, giving suppliers some power.

Production of jet fuel has various cost components such as raw materials (crude oil), labor, machinery, transportation, marketing costs, taxes, and others. Raw material (crude oil) cost is the major component accounting for more than 40% of the total cost. The costs associated with refining are highly dependent on the price of raw materials. Fluctuations in prices of the category impact the airline industry.

When it comes to procuring jet fuel, the hybrid model stands out as a widely adopted approach, merging in-house efforts with comprehensive outsourcing services. Some businesses prefer a partial outsourcing strategy, outsourcing specific operations like refining and distribution. Conversely, having an internal team handle tasks ranging from crude oil extraction to refining and transportation can prove advantageous. Building robust partnerships with suppliers and maintaining the reliability and traceability of the supply chain are crucial factors in sourcing within this category.

Jet Fuel Procurement Intelligence Report Scope