Jet versus diesel: open arbs, Chinese exports and diesel policy risk point to weaker regrades

• Trade update: The last Jet brief dated 17th Sep favoured short November NWE CIF jet differential over chasing further downside in Singapore regrade, while looking for a floor in LA sales differentials. That worked well. NWE CIF jet diff fell from around $148/mt to $110/mt, while LA October recovered to around -40.5 cpg from a low near -52 cpg. Singapore November regrade also weakened, moving from around +$1.90/bbl to -$1.80/bbl as diesel continued to outperform jet.
• My view is to stay short November NWE CIF jet differential, given wide-open import arbs and greater supply optionality in jet versus diesel. Look for further downside in Singapore Nov/Dec jet spread, particularly if Chinese exports remain robust. Stay constructive on October and November LA sales differentials from current depressed levels, although the reopening of Asian arbs from December should cap the upside. A US diesel export restriction would strengthen the bearish jet-versus-diesel relative-value view further.
• Diesel remains the key risk for jet regrade. Trump said he has discussed a diesel export ban with advisers, while Bessent said the administration is examining whether such a move is feasible. This remains a policy risk rather than a confirmed measure but combined with continued attacks on Russian refining and expectations that Moscow could extend its diesel export restrictions beyond September, the upside risk to European diesel remains significant. Any US restriction would further tighten Atlantic diesel supply and could drive both European and Asian jet regrades more negative.
• The Rotterdam arb board remains wide open, with November economics around +$174/mt ex-Yanbu, +$132/mt ex-WCI, +$94/mt ex-Singapore and +$55/mt ex-Ulsan, while Houston is also positive. This continues to give jet far more supply optionality than diesel and supports the view that NWE CIF jet differentials should struggle to sustain a large premium.
• China remains another source of jet supply. As per official data, August refined-product exports rose 12.7% y/y, with jet exports reaching a record 2.55mn tonnes, up 41.4% y/y. September flows also appear robust based on Signal tracking. Concerns that October exports could fall sharply because of Saudi crude supply disruption have eased somewhat following increased Ras Tanura loadings and the restart of the East-West Pipeline. The pipeline is initially running at reduced rates, with 40% capacity expected within days and full restoration potentially taking 6 to 8 weeks. This reduces some of the concern around feedstock availability and lowers the risk of a sharp drop in Chinese product exports in October.
• Time spreads tell a similar story. NWE Nov/Dec jet remains strongly backwardated at around +$58.5/mt, while Singapore Nov/Dec has eased sharply to around +$2.60/bbl from recent highs. In Singapore, the softer structure is more consistent with comfortable jet availability, particularly as concerns around Saudi feedstock supply ease and Chinese exports are likely to remain relatively steady. Singapore Nov/Dec still looks vulnerable to further weakness.
• LA sales premia have recovered from recent lows as Asian import arbs remain shut for October and November, although the economics are moving closer to breakeven. October Ulsan is now only around -0.7 cpg on an LR1, while November Singapore is around -3.8 to -4.8 cpg and Ulsan around -12.6 to -13.6 cpg. This should allow some further recovery in prompt LA differentials, but upside may be capped as several routes are already open from December onwards, potentially bringing Asian barrels back into the USWC.

(Arbs in Los Angeles)

(Jet arb in Rotterdam)

(Nov’26 Singapore and European Regrade)

((LA Jet premia Oct 26 and Nov 26)

About the Author
Abhishek Kumar | Senior Oil Market Analyst, Sparta Commodities
Abhishek is a Senior Oil Market Analyst at Sparta Commodities, based in Dubai, with a background spanning trading and analytics. Before joining Sparta, he held roles at Litasco, LSEG, and Reliance, where he focused on oil market analysis, spec trading, and broader oil market dynamics.
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