Jet fuel demand, already smashed by the novel coronavirus, just got dealt another blow as U.S. President Donald Trump announced that travel from Europe will be severely restricted to combat the spread of the disease.

The price of the petroleum product slumped as much as 10% on Thursday in Europe. People involved in the market said they expect an emerging glut to force excess supplies to go into storage while refineries do everything possible to produce other fuels like diesel instead. A weak market in Europe has snapped shut deliveries from Asia, potentially backing up inventories there, according to traders.

Trump said Wednesday that he will significantly restrict travel from Europe to the U.S. for 30 days, starting Friday at midnight, triggering a fresh plunge in airlines’ share prices. The measures will hit jet fuel demand that was already reeling from reduced flying.

“This is a major blow,” said Eugene Lindell, senior consultant at JBC Energy GmbH in Vienna, adding that the firm is considering lowering its demand estimates. There’s an incentive to try and minimize jet production, “which is highly unusual,” he added.

Jet fuel is normally a premium product because it’s relatively tricky to make and has to be of the highest quality. It’s regularly exported from Asia to the U.S. and Europe. While refinery margins have improved since crude’s tumble toward $30 a barrel, freight rates have risen, making it more expensive to move cargoes.

Prices Pummeled

“I am not surprised if jet fuel prices in every region are hurt,” said Peter Lee, senior oil and gas analyst at Fitch Solutions. “The overall airline industry has already been so affected by the viral spread.”

European prices were trading at $348.02 a ton, down 8.3%, by 3:41 p.m. in London, according to fair-value data compiled by Bloomberg. They’ve almost halved in price since reaching a peak for the year in early January. Jet fuel tends to trade relative to diesel, which itself has dropped 45% from its high this year.

European demand for fuels will soon be hit even harder as the coronavirus spreads across the region while appearing to slow in Asia, according to Ralph Leszczynski, global head of research at Banchero Costa Group.

The drop in Europe’s consumption is set to be so severe that a regular flow of middle distillates from Asia is drying up, according to refiners, traders and shipowners. Even the route for jet fuel from Asia to the U.S. will be impacted as airports cut trans-Atlantic flights, the traders said.

Travel Bans

Flight restrictions or bans are cascading across the world as the outbreak threatens to overrun more countries. Shares of Air France-KLM, one of the European airline groups most affected by the U.S. action, fell the most since 2002 on Thursday, with industry losses in market value since the start of the year surpassing $100 billion, based on the Bloomberg World Airline Index.

While cheap fuel might be considered a boon for the industry, for many carriers any help is negated by their hedging activities. Airlines will often protect themselves against high fuel prices in the future. The flip-side is that they don’t get the benefit when prices slump.

Demand for jet fuel could be curbed by as much as 250,000 barrels a day, split between the U.S. and European markets, during the period of the Trump administration’s travel ban, according to Mark Williams, principal analyst at Wood Mackenzie.

Jet fuel’s decline has been cushioned by the fact that oil refineries have been tweaking output to make other products, primarily diesel. Refiners will probably blend more jet into the distillate pool, adding to pressure on margins for those products, Williams said.