Jet fuel recovery will take months even if the Strait of Hormuz reopens, industry leaders warn. The key phrase jet fuel recovery emphasizes the prolonged timeline for normal supply. Airlines face major cost pressures due to disrupted Middle East refining.
Fuel costs represent the second-largest expense for carriers after labor, making up around 27 percent of operating expenses. The International Air Transport Association highlights this burden in its latest reports. Airlines have already been adjusting operations in response to the shortage.
Iran’s closure of the Strait of Hormuz disrupted global jet fuel supplies. News of a ceasefire and potential safe passage raised optimism among carriers. Airline stocks responded positively, reflecting hope for improved supply conditions.
Despite lower crude oil prices, jet fuel recovery remains slow. Willie Walsh, director general of IATA, explained that refinery disruptions continue to affect supply chains. He emphasized that months will be needed to return to normal levels.
Airlines worldwide have cut flights and added refueling stops to manage fuel constraints. Jet fuel prices surged during the Middle East conflict, far outpacing crude oil price movements. This situation is straining airlines financially and operationally.
Asian and European airline shares rose sharply following the ceasefire news. Qantas Airways jumped over 9 percent, while Air New Zealand increased by more than 4 percent. Cathay Pacific and India’s IndiGo also saw significant gains. European carriers such as Wizz Air, Air France-KLM, and Lufthansa benefited from rising investor confidence.
Gulf carriers, which contributed nearly 15 percent of international capacity, face temporary operational setbacks. Some capacity may be partially replaced by non-regional airlines, but full replacement is impossible. Walsh expects Gulf hubs to recover quickly once conditions stabilize.
Reopening the Strait of Hormuz will support crude oil flows and refined product availability, including jet fuel. Refineries in countries like India and Nigeria could boost production temporarily. Walsh noted that China and South Korea might resume exports of refined products after crude supply resumes.
Even with available refining capacity, jet fuel recovery will not be immediate. Elevated refinery margins create incentives to increase production, but the process takes time. Airlines and global markets will likely feel the effects for several months.
