News
Airline Industry · Jet Fuel · Oil Prices · Strait Of Hormuz
The Strait of Hormuz blockade, triggered by a US-Israel war against Iran, has doubled global jet fuel prices, with the index surging 95.2% to $195.2 per barrel by March 27, paralyzing critical supply flows and significantly impacting the airline industry.
The conflict, which began on February 28, led to Iran's closure of the vital waterway, through which 20% of the world’s daily oil demand, or 20 million barrels (15 million crude, 5 million petroleum products), transits. This disruption caused Brent crude to climb above $100 per barrel.
Europe, sourcing 30% of its jet fuel demand from the Persian Gulf according to IATA, is particularly vulnerable, relying on commercial stocks equivalent to one month's demand. Asian markets, receiving over 80% of crude via the Strait, also face severe supply constraints for refining jet fuel.
Rising war risk premiums and longer transit times due to rerouting around the Cape of Good Hope have driven up costs and extended delivery times. S&P Global Energy's Platts index showed northwestern Europe's jet fuel cost surged 95% from $873.2 on February 27 to $1,705.5 on March 27.
United Airlines CEO Scott Kirby stated that airfare prices must rise 20% for the company to cover these escalating jet fuel costs.
