• WHO Says Omicron Has Very High Global Risk
  • Travelers consider canceling, delaying their trips
  • Airlines are scrambling to limit the impact
  • Asian jet fuel cracks slip, time flies in contango

SINGAPORE, Nov. 30 (Reuters) – Global jet fuel markets remained under pressure on Tuesday as more countries widened border restrictions to keep the novel variant of the Omicron coronavirus at bay, prompting travelers to reconsider their plans .

Demand for jet fuel – the oil complex’s biggest laggard – is expected to show the fastest growth from 550,000 barrels per day to 5.9 million barrels per day in the fourth quarter, according to the International Energy Agency in its report November 16. AIE / S

But now Omicron poses the greatest risk for jet fuel consumption. Hong Kong has extended the entry ban to non-residents of several countries, the latest to extend travel restrictions after Israel and Japan already announced border closures to all foreign travelers. Read more

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Britain and Australia have tightened the rules for all arrivals in response to the new variant, while hundreds and thousands of potential travelers are now considering canceling or delaying their trips in response to the new restrictions. Read more

“The real risk of the new variant is (…) the reimposition of more widespread flight restrictions during the winter and a further significant reduction in the current global demand for jet fuel by about 6 million barrels per day,” said said the energy consultancy firm FGE in a note.

Jet fuel margins collapse to lowest in more than 2 months, as first month price gap turns into contango as Omicron triggers border restrictions

Asian refining margins for jet fuel fell to their lowest level in more than two months on Monday to $ 6.92 a barrel, while the first-month time gap for aviation fuel in Singapore fell to a contango for the first time since the end of September.

“Current levels of jet demand only exceed 1 mb / d last winter, when cases and hospitalizations were much higher and before any widespread vaccination,” Goldman Sachs analysts said in a note on 26. November.

“While the worst-case scenario could be a return to last winter’s levels, a 0.5mb / d drop from our current baseline through 2Q22 would be a conservative assumption given what we currently know. “

Uncertainty over highly transmissible variant of the Omnicron coronavirus darkens outlook for global oil demand

Global airlines, most of which have struggled since air travel plummeted last year as the majority of long-haul international flights remained on the ground, are now working to limit the impact of the latest variant on their networks. Read more

“In total, 2.4% of scheduled capacity (global airline) has been cut for the next four months,” aviation data company OAG said.

“But it is too early to say whether this is due to slightly lower than expected demand, or to an early response by some airlines to the prospect of the Omicron variant of the COVID-19 virus causing a return to border restrictions for travelers. international air travel. “

Trade sources said the new variant had dampened short-term hopes of a substantial recovery in demand.

“Now it’s like the snake and ladder board game. I think Vaccinated Travel Lanes (VTL) would be important to keep the momentum going in the aviation industry,” said a jet fuel trader based at Singapore.

“Certainly there is no hope of seeing a quick recovery, which was expected before this Omicron variant.”

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Report by Koustav Samanta; Editing by Florence Tan and Rashmi Aich

Our Standards: Thomson Reuters Trust Principles.