SINGAPORE/HONG KONG: Global jet fuel supplies could take months to normalise even if Iran reopens the Strait of Hormuz, due to disruptions to refining capacity in the Middle East, the head of the airline industry body said on Wednesday.
Fuel, the second-largest cost for airlines after labour, typically accounts for about 27% of operating expenses, according to the International Air Transport Association (IATA).
Iran’s closure of the Strait of Hormuz during the conflict has disrupted global jet fuel supplies, although news of a ceasefire and the prospect of renewed safe passage through the waterway has lifted airline stocks.
Oil prices fell below $100 a barrel after U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran, conditional on reopening the strategic shipping route.
IATA Director General Willie Walsh said that while crude oil prices may ease, jet fuel costs are likely to remain elevated in the near term due to refinery disruptions.
“Even if the Strait reopens and remains open, it will take months for supply to return to required levels,” Walsh told reporters in Singapore.
He said the current situation was less severe than the COVID-19 pandemic, which saw global aviation capacity collapse by up to 95% as borders closed.
“This is not comparable to COVID,” he said. “We are nowhere near that level of disruption.”
Instead, Walsh likened the situation to past shocks such as the aftermath of the September 11 attacks or the 2008–2009 financial crisis, when recovery took several months to a year.
Airlines worldwide have been adjusting operations in response to fuel shortages, including cutting flights, carrying additional fuel from departure points and adding refuelling stops, adding pressure to an industry already facing sharply higher fuel costs.
