BY COMFORT OGBONNA
The global airline industry has warned that jet fuel supplies may take several months to stabilize even if Iran reopens the strategically important Strait of Hormuz. Aviation leaders say the disruption to refining capacity across the Middle East has already created significant supply challenges that will not be resolved quickly.
The warning came from Willie Walsh, the director general of International Air Transport Association (IATA), who spoke with reporters during an aviation event in Singapore. He explained that although the reopening of the Strait could ease crude oil transport, the damage and interruptions affecting regional refineries mean jet fuel supplies may take months to return to normal levels.
Fuel remains one of the largest expenses for airlines worldwide, second only to labor costs. According to IATA, jet fuel typically accounts for around 27% of an airline’s total operating expenses. Because of this heavy dependence, even small disruptions in fuel supply or sudden price spikes can significantly affect airline profitability and ticket pricing.
The ongoing conflict involving Iran led to the closure of the Strait of Hormuz, a crucial shipping route that handles a large share of the world’s oil and petroleum products. The closure has severely restricted the movement of jet fuel and other refined products, tightening supply chains across global aviation markets. News of a temporary ceasefire and the potential reopening of the passage quickly lifted confidence in financial markets and triggered a surge in airline stocks.
Oil prices also reacted immediately to the developments. Crude prices dropped below $100 per barrel after Donald Trump, the president of United States, announced that he had agreed to a two-week ceasefire arrangement with Iran. The agreement reportedly depends on Iran allowing safe and immediate passage through the Strait of Hormuz, one of the world’s most vital energy corridors.
Despite the drop in crude prices, Walsh cautioned that jet fuel prices may remain higher for some time. He explained that while oil shipments might resume quickly, refinery operations and production capacity cannot instantly return to previous levels after being disrupted.
According to Walsh, even if the Strait reopens and remains accessible, rebuilding jet fuel supply chains will require time. Refineries across the Middle East play a critical role in producing aviation fuel, and interruptions to these facilities have created shortages that ripple through the global market.
He emphasized that the current situation should not be compared to the devastating impact of the COVID-19 pandemic on aviation. During the pandemic, international travel nearly came to a halt as governments shut borders worldwide, causing airline capacity to drop by about 95%. Walsh noted that the present disruption is serious but far less severe than that historic crisis.
Instead, he said the current challenge more closely resembles other industry shocks, such as the downturn following the 2008–2009 financial crisis or the recovery period after the September 11 attacks in the United States. Following those events, global aviation required several months to regain momentum.
After the September 11 attacks in 2001, the aviation sector needed roughly four months to recover its operational stability. During the global financial crisis of 2008–2009, recovery took significantly longer, stretching from ten to twelve months before demand and airline capacity normalized.
Meanwhile, airlines across Asia have already begun adjusting their operations to cope with the jet fuel shortage. Some carriers have reduced flight frequencies, while others are carrying additional fuel from their departure airports or adding extra refueling stops during long-haul routes. These adjustments are designed to ensure aircraft can complete journeys despite uncertain fuel availability in certain regions.
The pressure on airlines has intensified because jet fuel prices have surged dramatically during the conflict. Normally, jet fuel prices move closely in line with crude oil prices. However, during the recent crisis, aviation fuel costs rose far faster than crude oil prices. Jet fuel prices more than doubled, significantly outpacing the roughly 50% increase seen in crude oil before the ceasefire announcement.
The announcement of a possible reopening of the Strait of Hormuz brought immediate relief to investors in the aviation sector. Airline stocks across the Asia-Pacific region surged as markets reacted positively to the possibility that fuel shipments could resume.
Shares of Qantas Airways in Australia jumped by more than 9%, while Air New Zealand saw its stock rise over 4%. In Hong Kong, Cathay Pacific climbed about 5%, and India’s largest airline, IndiGo, recorded gains of up to 10%.
Walsh said the current disruption has temporarily affected airlines based in the Gulf region, which collectively accounted for about 14.6% of global international flight capacity last year. While airlines outside the region may increase their operations to compensate for reduced capacity, he acknowledged that replacing the full scale of services normally provided by Gulf carriers would be extremely difficult.
Even so, Walsh remains optimistic that the aviation hubs in the Gulf region will recover quickly once conditions stabilize. He expects data from April and May to offer a clearer picture of how deeply the conflict has affected airline operations and passenger demand.
Beyond crude oil shipments, the reopening of the Strait of Hormuz would also benefit global trade in refined petroleum products, including jet fuel. Walsh noted that refineries outside the Middle East may temporarily increase production to help close the supply gap.
Countries such as India and Nigeria have the potential to expand refined fuel output to help offset shortages during the adjustment period. Increased refining activity in these regions could help stabilize global aviation fuel supply while Middle Eastern refineries gradually return to full production.
Walsh also expressed hope that major refining exporters such as China and South Korea will resume shipments of refined petroleum products once crude oil flows normalize through the Strait.
He added that once crude oil shipments resume and refinery margins remain strong, energy companies will have strong financial incentives to ramp up jet fuel production. Higher refinery margins—known in the industry as the crack spread—encourage refineries to produce more high-value fuels such as aviation fuel.
Although the aviation sector remains cautious, industry leaders believe that once crude supply routes reopen and refineries adjust production levels, the global jet fuel market will gradually stabilize and airlines will regain more predictable operating conditions.
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