COVID-19 omicron leaves Asian jet fuel recovery dangling – Community News
Covid-19

COVID-19 omicron leaves Asian jet fuel recovery dangling

Highlights

Many countries impose strict controls, quarantine measures

Demand uncertainty to limit gains in jet fuel prices: sources

The impact of Omicron will likely be felt in H1 2022: Platts Analytics

The new COVID-19 variant omicron has led to greater uncertainty for air travel as many Asian countries deploy new rules and motion controls to contain the spread of the virus, raising hopes of a sustainable near-term recovery in jet fuel demand. is thwarted.

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“The market hoped that December-January travel would increase before the ommicron variant was discovered, but it now seems very uncertain,” said an industry source.

Countries have responded by taking stricter measures, including extending quarantine requirements, increasing COVID-19 testing and limiting or banning entry from African and select countries altogether, which will affect travel, he added. .

India has likely postponed plans to resume regular international flights from December 15, thwarting hopes of a return to normalcy after a long hiatus. The country suspended flights around March 2020 as the pandemic hit many countries around the world.

A circular from India’s Directorate-General for Civil Aviation, issued on Dec. 1, reads: “Given the evolving global scenario with the emergence of new variants of concern, the situation is being closely monitored.” An appropriate decision regarding the effective resumption date of scheduled commercial international passenger flights will be announced in due course, it added.

Singapore has postponed its plans for quarantine-free vaccinated itineraries with Qatar, Saudi Arabia and the United Arab Emirates, originally scheduled for Dec. 6.

Hong Kong has added Singapore and Iceland to the list of high-risk countries from Dec. 6 after infections with omicron variants were discovered there. It has also introduced additional requirements for passengers traveling from overseas countries and Taiwan via Hong Kong.

The Philippines and Indonesia have also imposed additional travel restrictions, while the Vietnamese Ministry of Health has urged local authorities to temporarily suspend flights to and from certain countries to curb the spread of this variant.

Thailand has banned travelers from eight African countries from December, while Japan has suspended entry for new, non-resident foreigners, including students on a school trip, effective November 30.

Demand uncertainty

In the January-October period, Asia-Pacific airlines flew 12.479 million passengers, an 81.6% year-over-year decline, and only 3.9% of the 31 million passengers registered during the same period in 2019, according to data from the Association of Asia Pacific Airlines on Nov. 25.

Uncertainty over demand remains a major concern as the portability of the variant and its severity continue to be assessed, industry sources said.

“If demand remains constant, the global supply of jets looks relatively tight. We see that a bit in the fast money markets in each region,” said a trade source.

“But with the risk of border closures and sudden losses in demand, these things can change quickly, so it’s a very unclear path forward for now,” he added.

On December 6 at 0830 GMT in Asia, the FOB Singapore jet fuel/kerosene cash differential was rated at plus 38 cents/b against the Mean of Platts Singapore jet fuel/kerosene ratings, down 12 cents/b day over day, Platts data showed.

“Market liquidity is now even worse with the travel advisories that have been issued. We don’t know the exact market level [of prices] and we’re not sure if more action will be taken in the future,” said a source at the refinery.

In South Korea, where inbound travelers, including returning Korean nationals, must be quarantined for 10 days, refineries said their run rates could be affected depending on short-term demand for jet fuel.

Hoping for better air

“Governments are responding to the risks of the novel coronavirus variant in emergency mode, causing fear among the traveling public,” IATA Director General Willie Walsh said in a statement on Nov. 26.

“We need to use the experience of the past two years as soon as possible to move to a coordinated data-driven approach that finds safe alternatives to border closures and quarantine,” added Walsh.

The impact of omicron, if it spreads wildly, will most likely be felt in H1 2022 as governments in the region tighten measures to contain the spread of the new variant, said JY Lim, oil markets adviser at S&P Global Platts Analytics.

“Currently, we expect kerosene/jet fuel demand in Asia Pacific to grow 600,000 b/d year over year in 2022, following a sharp contraction of more than 1 million b/d in 2020 and a modest increase of 30,000 b/d. d expected for 2021,” said Lim.

“While we are likely to lower our growth outlook for next year, especially in the first half due to travel restrictions, aviation demand is expected to increase as governments generally have a higher degree of tolerance for COVID-19 infections and will looking for ways to safely resume travel activities,” Lim added.