The U.S. jet fuel market in early 2025 is expected to continue the pattern set over the final months of 2024 — slightly lower prices even as demand increases, according to market sources.

In addition, the sources said fuel prices could see some swings in the new year as airlines make progress in introducing sustainable aviation fuel as part of their drive to achieve net-zero carbon emissions.

While market participants acknowledged that price spikes could occur next year in response to refinery issues, most expect downward pressure on prices will likely continue. In the first quarter of 2024, OPIS jet fuel spot prices across the major markets averaged just over $2.73/gal. By the third quarter the average price had fallen to $2.33686/gal and continued to decline into the fourth quarter.

The International Air Transport Association estimated the average cost of jet fuel next year will be about $87/bbl, or $2.0714/gal, well under 2024’s lows. IATA also said that the cumulative cost of jet fuel in 2025 will be $248 billion, nearly 5% below 2024. At the same time, the industry said it expects fuel consumption will rise by 6% next year to 107 billion gal, a number in line with what airlines’ have been reporting over the last several quarters.

Refinery problems, however, could upend the expected price decline, at least temporarily. In late January and early February 2024, West Coast jet fuel spot prices shot higher after Marathon Petroleum reported problems with the jet fuel hydrotreater at its 382,000 b/d Los Angeles refinery. OPIS assessed LA and San Francisco spot jet fuel prices rose to about $3.65/gal, while Pacific Northwest spot values surpassed $3.80/gal. Those prices didn’t last long and continued to drop for the rest of the year, leaving LA and SF spot prices at times below $2/gal.

The story was similar for Chicago spot jet fuel prices, which soared in the first quarter due to issues at BP’s 440,000 b/d Whiting, Ind., refinery. The spot price jumped to as high as $3.18/gal and spiked above $3.30/gal in mid-March as other refineries in the region reported issues. But, as was the case on the West Coast, the high prices were short-lived.

After those early spikes, U.S. spot jet fuel prices only topped $3/gal once in Chicago and that price held for just a day.

Average moves in U.S. spot jet fuel prices between late January and early February were 6.89cts/day, while the price moves over the last few months of 2024 averaged just 3.82cts/day.

Jet fuel demand has also stabilized as air traffic has largely recovered from pandemic lows. The Energy Information Administration estimated jet fuel demand averaged about 1.65 million b/d in 2024, 2% above the 2023 average of 1.617 million b/d.

IATA estimated demand for air travel in the new year will rise by 8%, with an estimated 40 million departures globally. That may not, however, translate into a corresponding increase in fuel demand thanks to the deployment of more efficient aircraft.

IATA also said it expects global air carrier revenue in 2025 will top $1 trillion for the first time, more than 4% above projected 2024 numbers. In addition, the industry group projects overall costs will rise by 4% year to year to $940 billion. Of that total, 26.4% will be for fuel costs, down from 28.4% for in 2024.

Increased availability of SAF will be one of the larger issues affecting the airline industry in the new year.

The Carbon Offsetting and Reduction Scheme for International Aviation aims to stabilize global aircraft carbon emissions to 2020 levels. The voluntary first phase began in 2024 and runs through 2026. The second, mandatory, phase, is set to run from 2027 through 2035.

SAF is likely to provide most of the early term emission reductions in becoming more available. IATA said about 330 million gal of SAF was produced worldwide in 2024. That’s double the amount made in 2023 and output is expected to continue to rise in 2025, with IATA projecting production at 713.26 million gal.

Still, SAF production represents a fraction of the airline industry’s total fuel consumption. The 330 million gal made in 2024 is less that one day’s worth of global aviation industry demand of 336 million gal/day. IATA said the actual growth has fallen short of expectation.

Even so, SAF will become a bigger part of the jet fuel market in 2025. IATA reported 70 airlines have signed voluntary commitments to buy about 11.5 billion gal of SAF by 2030.

SAF remains more expensive than conventional jet fuel and will likely boost carriers’ total fuel costs. IATA said the industry in 2024 paid about $700 million to meet CORSIA obligations and projects that will rise to $1 billion next year. SAF is expected to add $3.8 billion to fuel costs in 2025 – more than double the $1.7 billion addition seen this year for SAF use.

“SAF volumes are increasing, but disappointingly slowly,” said Willie Walsh, IATA’s Director General, in a December news release. “But make no mistake that airlines are eager to buy SAF and there is money to be made by investors and companies who see the long-term future of decarbonization.”