ewsba.se
Air travel is going to be more expensive this summer.
Jet fuel costs have soared more than 100% since the start of the Iran war, and a global shortage has prompted airlines to cut thousands of flights. The US Travel Association said airline fares rose 14.9% in March compared to the same month last year.
The near-standstill at the Strait of Hormuz has removed more than 13 million barrels of crude oil from the market, according to JPMorgan, creating a shortage for refineries that process it into derivative products such as gasoline or diesel fuel.
“When refinery output tightens globally, aviation fuel is often the first to feel it,” noted GasBuddy’s Patrick De Haan on Wednesday.
The analyst noted that jet fuel is the smallest of the “big three” refined products, behind gasoline and diesel, meaning that diesel and gasoline are typically prioritized due to their importance for key sectors such as freight and agriculture.
The Strait of Hormuz blockage has paralyzed an estimated 20% of global seaborne jet fuel and its kerosene base. This creates a dual crisis for aviation: It chokes the crude oil needed by refineries while simultaneously halting the delivery of finished fuel to international airports.
GasBuddy’s De Haan pointed to estimates of disruptions tied to the Strait, which could cut jet fuel and kerosene supplies by roughly 620,000 barrels per day in the second quarter of 2026. The decline reflects both interruptions to shipments moving through the waterway and lower refinery output in Asia, where many facilities rely heavily on Middle Eastern crude.
For airlines, the price increases in jet fuel mean far higher costs, much of which must be passed on to the consumer.
Jet fuel is typically one of the largest operating expenses for carriers, and the recent rally in crude has driven up the cost. Higher fuel bills can quickly squeeze profitability, particularly for airlines that have limited hedging in place or operate in highly competitive markets where ticket prices are harder to raise.
Front-month jet fuel swap prices in the US Gulf Coast — a key benchmark used by airlines to gauge fuel prices — have come off their mid-March highs but are still roughly 50% higher than their pre-war prices, trading above $330 per gallon from roughly $234 a month ago, according to Bloomberg data.
Delta Air Lines (DAL) disclosed in April an expected $2 billion cost in the second quarter from the surging jet fuel prices. American Airlines (AAL) expects $4 billion in additional expenses for the full year.
“We are meaningfully reducing capacity in the current quarter with a downward bias until we see the fuel situation improve,” Delta CEO Ed Bastian said on an earnings call with analysts and investors in April. “With much of the industry still struggling to earn its cost of capital, there's a high sense of urgency to address higher fuel and reduce unprofitable flying.”
He added, “High fuel prices have been the most powerful catalyst for change, separating the winners and forcing weaker players to rationalize, consolidate, or be eliminated.”
The airlines are left with little margin for error, just as the summer travel season is picking up.
Last month, the head of the International Energy Agency, Fatih Birol, warned that Europe had about six weeks of jet fuel supply left. Lufthansa recently cut 20,000 flights through October in an effort to save on jet fuel costs.
In the US, major airlines, including United Airlines (UAL), Delta, and American, have all scaled back schedules on select routes. Delta’s Bastian noted at a recent conference hosted by JPMorgan that airlines are already raising fuel surcharges and base fare prices for customers, noting that it's "something that we've got to cover to maintain our margins."
Low-cost carrier Spirit Airlines recently collapsed after facing significant financial pressures and restructuring challenges. Rising fuel costs added further strain in the period leading up to its failure.
Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities. She has reported live from the floor of the New York Stock Exchange and Nasdaq.
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
Click here for the latest economic news and indicators to help inform your investing decisions
Read the latest financial and business news from Yahoo Finance