Jet fuel prices have roughly doubled since the war in Iran began, climbing faster than gasoline and diesel. Airlines around the world are responding by cutting routes, trimming schedules, raising fares, adding fuel surcharges and increasing baggage fees.
Asia has been the hardest hit. Several countries are rationing aviation fuel and restricting exports to manage the supply shock. Analysts say the disruption is centered on Asia: with major regional suppliers curtailed, the market there is particularly strained.
Two linked problems explain the acute squeeze. First, many refineries in and near the Persian Gulf produce finished jet fuel for export; with shipping through the Strait of Hormuz reduced to a trickle, those shipments aren’t reaching buyers. Second, crude oil from the Gulf — the raw material for refineries worldwide — is also being delayed or blocked, which lowers production capacity farther afield. That double impact on both finished product and crude feedstock is pushing prices up quickly.
The effect is concentrated because several of the largest jet-fuel sources are effectively offline or constrained at once. China has banned jet fuel exports, South Korea has cut production because it does not have sufficient crude supplies, and Kuwait faces logistical hurdles exporting its output. In short, the three biggest suppliers have been sidelined simultaneously.
Even the United States, the world’s largest oil producer and a net jet-fuel exporter, feels the knock-on effects. Parts of the U.S. West Coast, especially California, have long imported some jet fuel from Asia. Domestic refinery closures and shifting supply patterns make it harder and more expensive to move fuel from the Gulf Coast to the West Coast — shipping via the Panama Canal or long rail moves can cost more than previous imports. That creates the potential for shortages or extra price pressure on the U.S. West Coast if overseas suppliers can’t deliver.
Airlines’ finances are exposed. Many carriers wound down their fuel-hedging programs after a period of low prices, leaving them vulnerable to a fast spike. Delta has warned investors that higher fuel could add roughly $2 billion in costs this quarter. Owning a refinery gives Delta some insulation, but the industry as a whole faces a large bill.
Carriers are reacting by pruning unprofitable flights and routes and shifting some of the burden to passengers through higher ticket prices and fuel surcharges. Executives report that demand has held up, so airlines are using price and capacity moves to protect margins.
Supply relief won’t be immediate even if shipping lanes reopen. Restarting shut oil fields and refineries can take weeks or months, especially where facilities were damaged. Tankers also need time to travel between regions, and market trackers report that the last shipment of jet fuel to Europe via the Strait of Hormuz left before the conflict began — no follow-up deliveries are currently en route. Analysts say the market has effectively seized up and that it will take substantial time for production and shipments to normalize and for prices to come down.