Jet Fuel Crisis Looms as Hormuz Closure Sends Airline Costs Surging

Jet Fuel Crisis Looms as Hormuz Closure Sends Airline Costs Surging Strait of Hormuz blockade threatens to raise airfares globally as jet fuel supplies tighten and refining margins spike. Jet fuel prices have climbed sharply in recent weeks as the effective closure of the Strait of Hormuz cuts off roughly 15 million barrels per day of crude and refined products from global markets. The blockade, triggered by US and Israeli attacks on Iran and retaliatory strikes in mid-May, has halted the flow of both crude oil and the jet fuel refined from it out of the Persian Gulf.³ That matters for airlines because jet fuel typically accounts for 25-35% of an airline’s operating costs. With crude prices elevated — ICE Brent front-month settled at $86.80 on Friday (2026-06-12) — and refining margins for middle distillates widening, carriers are facing their steepest fuel cost increases in years.³[LIVE_PRICES] The UK is among the most exposed European economies, according to the International Monetary Fund. UK wholesale gas prices rose roughly 75% between late February and March 23, and petrol prices have already climbed 14 pence a litre — about 10% — since late February. Jet fuel costs have tracked those gains.^5,4 Short-haul carriers with thinner margins will feel the pressure first. Budget airlines in Europe and Asia typically hedge less of their fuel exposure than legacy carriers, meaning spot price moves hit their bottom line directly. Any sustained rise above current levels will force base fare increases or fuel surcharges.⁴ Australia faces its own pressure point. The country relies on imported refined fuels, and the Strait of Hormuz closure compounds existing supply chain strains. Around 7% of Australian fuel imports transit the Strait, and with refueling stockpiles already tight before the crisis, domestic airfares are set to rise.⁶ Japan’s experience shows what happens when the crisis goes deep. Tokyo has released roughly 80 million barrels from strategic reserves — equivalent to 26 days of domestic oil demand — to stabilise supply. Even so, fuel costs have climbed, and airlines have already announced surcharges on international routes.¹ The US is less directly exposed through crude imports — only about 7% of American oil imports travel via Hormuz — but jet fuel prices are set by global markets, not local crude production. US airlines have already begun raising prices on long-haul routes as benchmark RBOB gasoline settled at $3.04 per gallon on Friday (2026-06-12) and diesel at $3.40.⁶[LIVE_PRICES] The transport cost shock is already feeding through to inflation data. UK petrol prices have risen 10% since late February, and the IMF warned that Middle East conflict would feed directly into higher prices, weaker growth and renewed household pressure. Jet fuel costs will compound that dynamic.^4,5 Some relief may come from OPEC. The cartel, in a meeting planned before the war began, said it would increase production by 206,000 barrels per day in April. But that increase was agreed before the Strait closure took nearly 15 million bpd offline — a far larger swing.³ The UAE is moving to reduce its reliance on the Strait. Abu Dhabi fast-tracked plans for a new oil pipeline to bypass the chokepoint, announced on May 19. But the project will take months to complete, offering no immediate help to global jet fuel refiners.⁷ Negotiations between the US and Iran have stalled, with conflicting messages about the prospect of renewed talks. As long as the Strait remains effectively closed, the daily supply deficit widens by roughly 14 million barrels.^2,8 The next signal for airlines — and their passengers — will be whether JKM spot LNG prices, which settled at $18.85 on Friday (2026-06-12), take another leg up as summer cooling demand in Asia competes for the same limited gas supply. Any further rise in natural gas prices will push up power costs for refineries, compounding jet fuel output costs. [LIVE_PRICES]¹