Analysis: Jet Fuel Demand Set to Rise, But Faces Headwinds

VIENNA (DTN) – U.S. jet fuel demand in 2025 grew at a rate similar to last year’s as passenger air travel continued to set new records. This year, jet fuel supplied to the domestic market ran slightly ahead of the post-COVID highs set in 2024. Growth, however, was constrained by pilot and air traffic control shortages cutting into the number of operational flights.

Fuel demand is set to rise in 2026 as it faces an uphill battle against a shrinking domestic flight segment and persistent operational constraints. A slowdown in the fleet rejuvenation rate – supply chain delays have kept older, less fuel-efficient aircraft flying longer – is set to provide some tailwind to jet fuel demand. Sustainable aviation fuel (SAF), while slowly growing in market share, still accounts for less than 1% of jet fuel consumption.

Jet fuel supplied, a proxy for demand, averaged 1.727 million bpd in the first nine months of 2025, up 2.3% year-on-year, according to U.S. Energy Information Administration (EIA) data. During peak demand season between May and early September, consumption of kerosene type jet fuel even surpassed 2019 levels for the first time since the pandemic induced collapse of the market in 2020, the same data showed.

In their market outlook published last week, the International Air Transport Association (IATA) forecast global passenger numbers to grow by 4.4% year-on-year in 2026. IATA cited several hurdles for the North American air travel market. Ongoing operational constraints including pilot and air traffic controller shortages are set to limit capacity growth in the U.S. next year to 1%, the lowest rate globally.

 EIA, meanwhile, projected only a marginal uptick in domestic jet fuel demand in 2026. In their latest short-term energy outlook, the agency estimated consumption next year to outpace 2025 levels by 0.6%. Still, jet fuel demand remains the fastest growing among petroleum fuels in a market facing competition from alternative fuel sources and slowing economic growth.

Jet fuel inventories are well-supplied near historical highs ahead of 2026. 

Jet fuel prices, meanwhile, are bound to stay relatively low and will continue to be pressured by softening crude oil prices. EIA expects an average wholesale price of $2 gallon in 2026, down 8.7% year-on-year. The WTI spot price is forecast to decline by more than 21% next year to an average of $51.42 bbl, according to the EIA.

Waning refining capacity should provide some support to jet fuel prices – EIA forecast a nearly 5%-drop in domestic jet fuel production, but the effect from the surplus-induced fall in crude oil prices is likely to outweigh the effect of the supply loss.