Neste, the world’s largest producer of renewable jet fuel, reported a significant turnaround in its financial performance for the first half of the year, moving from a net loss of €76 million a year earlier to a profit of €1.3 billion. The improvement comes amid soaring prices and margins for renewable fuels, driven in part by geopolitical tensions in the Middle East.
The conflict in the region has influenced global oil and product markets, creating an “exceptional market environment,” according to Heikki Malinen, Neste’s chief executive. The company’s sales margin on renewable products more than tripled year on year, reaching a record $1,223 per tonne in the second quarter, up from $361 per tonne a year earlier and exceeding analyst expectations by $164. Prices for sustainable aviation fuel (SAF) and renewable diesel in Europe rose as much as 31% and 24%, respectively, compared to pre-conflict levels.
Renewable fuels such as SAF and renewable diesel are produced from feedstocks like cooking oil and animal fats. While Neste experienced elevated margins during the peak period, management noted a recent decline as rising feedstock costs began to catch up with product prices.
Malinen expressed a cautious outlook for the company’s future performance, highlighting the volatility of oil product prices that makes margin predictions challenging. Nonetheless, he emphasized that ongoing supply shocks have placed energy security at the forefront of governmental policy discussions, potentially supporting long-term demand for renewable fuels as alternatives to imported fossil fuels.
Reducing dependence on imported fossil fuels is seen as a strategic goal for many countries, both to enhance energy security and to address climate change challenges. The renewable jet fuel market remains heavily dependent on government mandates. The International Energy Agency projects that global SAF consumption could grow ninefold from 1 billion liters in 2024 to 9 billion liters by 2030. However, even with this growth, SAF is expected to represent only about 2% of total aviation fuel demand by the end of the decade under the agency’s main scenario.
Neste also cited benefits from anticipated increases in biofuel demand in the United States. Earlier this year, the U.S. government finalized new renewable fuel regulations that significantly raised biofuel blending mandates for 2026 and 2027. The U.S. Environmental Protection Agency expects production and use of biodiesel and renewable diesel to rise by more than 60% compared with 2025 levels, which could further support Neste’s market position.
Overall, the combination of geopolitical factors, policy shifts, and rising fossil fuel prices has contributed to a favorable but uncertain environment for renewable fuel producers like Neste as they navigate volatile markets and evolving regulatory landscapes.