Airport strikes in Germany trigger uncertainty on jet fuel market strength: S&P GCI

According to S&P Global Commodity Insights (GCI), the strike has raised concerns about its impact on jet fuel demand and market dynamics, contributing to uncertainty in the aviation sector.

Ground staff at major airports across Germany staged an organized industrial action on February 20, marking the second strike this month as workers advocate for higher wages. According to S&P Global Commodity Insights (GCI), the strike has raised concerns about its impact on jet fuel demand and market dynamics, contributing to uncertainty in the aviation sector.

The aviation strikes in Germany have disrupted operations and are affecting jet demand in Europe. The walkout by pilots, security personnel, and ground service staff results in lost volume on jet fuel, exacerbating challenges faced by airlines already grappling with the aftermath of the pandemic.

While jet fuel demand is anticipated to increase in the second half of the year, airline capacity is not expected to return to pre-pandemic levels in 2024. This industrial action adds to the complexities faced by airlines as they navigate recovery efforts and operational disruptions.

The labor union Verdi's lead negotiator, Marvin Reschinsky, indicated that longer strikes could be imminent if negotiations with airlines, particularly Lufthansa, do not yield favorable outcomes. Previous strikes led to significant flight cancellations, with reports indicating that between 80 per cent to 90 per cent of Lufthansa's flights were affected across Germany on January 20.

The series of strikes in Germany, Europe's largest economy, have impacted various sectors, including air travel, railways, and public transport. Workers are advocating for wage increases to align with inflation rates, highlighting the broader labor disputes prevalent in the country.

The additional loss in volumes resulting from the strikes may exacerbate the subdued demand in the jet fuel market, leading to mixed projections on market tightness despite anticipated seasonal demand upticks. Platts assessed the Cost, Insurance, and Freight Northwest Europe (CIF NWE) jet cargo cash differential down USD 5 on February 19, reflecting weakening market sentiment.

Some industry sources express concerns about the potential tightening of the jet fuel market, citing upcoming summer schedules and ongoing refinery maintenance in Europe. However, others remain cautious, pointing to slow demand recovery and the arrival of diverted cargoes from the East of Suez to meet fresh demand.

Despite these dynamics, considerable uncertainty persists, particularly regarding the shipping crisis in the Red Sea. Recent attacks on commercial ships in the Bab al-Mandab Strait off the coast of Yemen have raised concerns about escalating tensions and their potential impact on market stability.

The latest attack marks a significant escalation in the region, prompting heightened vigilance among stakeholders in the energy and shipping sectors. The evolving situation underscores the need for continued monitoring and proactive measures to mitigate risks and ensure market resilience in the face of ongoing challenges. (ANI)

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