COMMENTARY: The Jet Fuel Supply Crisis – This Was Supposed to Be SAF’s Moment

May 26, 2026

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by Elvis Ebikade (Bioleum/Green Air) There is a version of the SAF story that sounds like good news. SAF feedstocks – used cooking oil, tallow, animal fats – are sourced domestically, collected regionally, and priced by local supply and demand. They do not move with OPEC decisions or Persian Gulf shipping lanes. When the Strait of Hormuz closed in late February and crude oil surged from $61 to above $114 per barrel, SAF feedstock prices barely flinched. On the production side, SAF is genuinely decoupled from fossil fuel production, upstream logistics and economics. That is a real structural advantage, and the energy security case for SAF rests on it. Here is the part nobody is saying out loud: the price of SAF moved anyway, writes Elvis Ebikade.

SAF prices spiked alongside jet fuel, because SAF is not priced on its own production economics. It is priced as a spread to gasoil futures. Gasoil followed crude up. So SAF followed crude up, even though nothing in SAF’s actual supply chain or feedstock costs had changed.

Repsol, one of Europe’s largest refiners, said it plainly: SAF and renewable diesel prices have risen sharply since the outbreak of conflict in the Middle East because both are priced against gasoil futures, which have proved highly sensitive to disruptions of tanker freight through the Strait of Hormuz.

The production side is decoupled. The pricing side is not. SAF is a volume hedge – you can still source and produce fuel when fossil supply chains break – but not a price hedge, as you still pay as if your fuel came from the same barrel. That contradiction is the framework mismatch and the industry is acting as though it does not exist.

Crude oil figured this out decades ago. Brent reflects North Sea production: light, sweet crude, waterborne, priced for the Atlantic Basin. WTI (West Texas Intermediate) reflects US shale: slightly lighter, slightly sweeter, pipeline-delivered to Cushing, Oklahoma. Dubai/Oman covers heavier, sourer grades bound for Asian refineries. Three benchmarks for one commodity, because one number could not describe a product that varies by geography, chemistry and logistics.

Nobody in oil trading thinks this is exotic. It is basic infrastructure.

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Alcohol-to-jet pathways have entirely different feedstock economics. Fischer-Tropsch gasification operates on a different cost curve altogether. We are comparing outputs from fundamentally different industrial processes and calling it one market.

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Renewable feedstock costs barely moved while crude doubled.

On the pricing side, none of that mattered. SAF prices followed jet fuel up, because they are benchmarked as a spread to gasoil.

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The production economics did hold steady. But the price airlines actually paid did not, because the pricing framework dragged SAF back into the same volatility it was supposed to escape.

General Index recently calculated HEFA SAF production costs in Rotterdam at $1,550/t while fossil jet in the same location was assessed at $1,633/t. For possibly the first time, it was cheaper to make SAF than to buy fossil jet. But because SAF is priced as a spread to gasoil rather than on its own production economics, that signal barely registered in the market. The production side sent a clear signal. The pricing side could not hear it.

What this means

The production side and the pricing side of SAF are telling two different stories. Production says: this fuel is competitive, domestically sourced and independent of fossil economics. Pricing says: this fuel costs whatever gasoil futures say it costs. As long as pricing wins, the energy diversification and price hedge that SAF could genuinely offer cannot reach the people making procurement and investment decisions.

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To developers, offtakers, investors, traders and airlines reading this: what pricing structure would actually reflect your economics? Are there models from LNG, refined products or power markets we should be adapting? And which price reporting agencies should be leading this? READ MORE

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Excerpt from Wall Street Journal: “Currently available SAF supply does not meet global airline demand for even one week,” Delta Air Lines told investors earlier this year, also asserting SAF is “the most promising lever known today” to decarbonize flight. Meanwhile, Delta said that last year it secured 23.4 million gallons of SAF, an 80% jump compared with the year before.

One of the main reasons SAF remains in scant supply is it’s expensive to produce and to buy. Manufacturing largely focuses on converting used cooking oil, animal fats and forestry waste into jet fuel. Airlines so far have favored these “drop-in fuels,” because they are chemically identical to fossil fuels and work with traditional engines.

Shortly before the war, a ton of SAF cost about $1,500 more to buy than a ton of traditional jet fuel, according to data from commodities pricing agency Argus Media.

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To add to this, SAF production is dominated by startups. Energy majors like BP, Eni and Repsol invested in the field, but have largely focused on distributing traditional fuel instead of reconfiguring their refineries to make SAF.

“Oil majors see that there’s more money to be made in the supply of fuel than in the production of fuel,” said Tom Berg, director of policy sustainability at SkyNRG, a Dutch SAF startup. “And that’s why the current SAF project pipeline is dominated by independent developers who are dependent on project financing to get their projects to a final investment decision.”

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According to Argus Media, 260 SAF projects are planned globally, but only 42 have reached a stage in which they can start building and just a handful are operational, showcasing how few projects are still fully financed.

Last September, Dutch oil giant Shell shuttered production of its biofuels facility in Rotterdam, which would have produced 820,000 tons of biofuel a year including SAF. “It became clear that the project would be insufficiently competitive to meet our customers’ need for affordable, low carbon products,” Machteld de Haan, Shell’s downstream, renewables and energy solutions president, said at the time.

One major point of success for the industry, however, is it is no longer reliant on voluntary demand. Last year, the European Union and the U.K. rolled out mandates requiring 2% of all jet fuel supplied from European airports to be made from SAF. That requirement will get stricter by increments going forward to hit 70% in 2050.

What actually counts as SAF is also going to get stricter. Fats and used cooking oils will eventually be replaced by second and third generation e-fuels made up of captured carbon and green hydrogen. Again those fuels are likely to be a major cost for airlines, with estimates that the cost could be 10 times higher than traditional fossil fuel.

A smattering of recent announcements about SAF investments could be a boon to the industry.

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SAF producers say they have been hearing a new tune from aviation companies since the war broke out.

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“We’ve seen a dramatic uptick in [buyers] wanting to talk about security of supply” since the war started, Best (Trevor Best, chief executive of Texas-based SAF startup Syzygy Plasmonics) said.

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Giving U.S. SAF producers more assistance at the state and federal level would bolster the country’s supply and, in turn, beef up the country’s energy security, said Kevin Welsh, Chief Sustainability Officer for Airlines for America, a trade association.

“When you have an oil shock like we’re currently facing, ideally SAF is a buffer against that,” said Welsh. “Where we are today, because volumes are so small, we’re not at a point where SAF can play that role.” READ MORE

Excerpt from Biofuels Digest: Once upon a time there was a daring and skillful hoop-jumper named Saff. No one could jump hoops like he. He could somersault through flaming hoops, sustainability hoops, carbon-intensity hoops. Children cheered him. Elders admired him. One day the King announced a grand hoop-jumping contest to be held in the Palace Gardens. The villagers were delighted.

“You must enter!” they cried.

Saff hurried home and designed the most magnificent hoops ever seen. They were cleaner, greener, safer, more transparent, more sustainable, and considerably more complicated than ordinary hoops. Then he rode into town to raise the money to build them.

The Banker studied the plans. “Remarkable hoops,” he said. “I shall gladly finance them once you prove that you can jump through them.”

“But I need the hoops in order to prove I can jump through them.”

The Banker nodded sympathetically. “These things happen.”

The Farmer studied the plans. “I shall gladly provide materials for the hoops once the contest is definitely taking place.”

“The contest cannot take place until the hoops are built.”

“Then,” said the Farmer, “we appear to have discovered a sequencing challenge.”

The Airliner studied the plans. “I should be delighted to purchase tickets for the contest once you can guarantee that the performance will cost no more than last year’s contest.”

“There was no contest last year.”

“Excellent,” said the Airliner. “Then you have a benchmark.”

It sounds like a fairy tale. Yet anyone who has spent time around the drive to produce sustainable aviation fuels will recognize it as documentary realism.

This week, SkyNRG and KLM Royal Dutch Airlines officially celebrated the start of construction of DSL-01, a 100,000-tonne-per-year Sustainable Aviation Fuel facility in Delfzijl. Using the HEFA pathway, the plant will convert waste fats, greases, and used cooking oils into SAF and renewable co-products. The headlines focused on the groundbreaking. The deeper story is how long it took to get there. READ MORE