IATA Warns Jet Fuel Supply Recovery Could Take Months Despite Strait of Hormuz Reopening
The International Air Transport Association (IATA) has warned that, despite news of a ceasefire and the reopening of the Strait of Hormuz, the global jet fuel supply could take months to stabilize. Disruptions in refining capacity across the Middle East have created a bottleneck that will keep operating costs under pressure throughout the next quarter.
Refining Capacity Challenge in the Middle East
Willie Walsh, Director General of IATA, explained during a conference in Singapore that even if oil flow normalizes, the impact on the region’s refineries is profound. According to Walsh, restoring the supply levels required by the aviation industry will not be immediate.
“If the strait remains open after its reopening, I think it will still take a period of months to get back to where the supply needs to be, given the disruption to refining capacity in the Middle East,” the executive stated.
This situation is exacerbated by pricing behavior. While crude oil fell below $100 per barrel following U.S. President Donald Trump’s announcement of a two-week ceasefire with Iran, jet fuel costs remain elevated. Refinery crack spreads—the profit margin for refining—remain high, which incentivizes production but keeps the final price for airlines above pre-conflict levels.
Financial Impact: Fuel as a Critical Factor
Fuel represents the second-largest expense for air carriers after labor, typically accounting for 27% of operating expenses. During the conflict with Iran, jet fuel prices more than doubled, significantly outstripping the 50% increase recorded in crude oil prices.
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To mitigate the shortage and high costs, airlines worldwide have implemented severe contingency measures:
- Frequency reductions and flight cancellations.
- Fuel tankering practices (carrying extra fuel from origin airports).
- Scheduling additional technical stops for refueling on long-haul routes.
Historical Comparison: Far from the COVID-19 Scenario
Despite the gravity of the situation, Walsh dismissed comparisons to the pandemic crisis. “This is not similar to COVID. It is not a crisis anywhere near what we experienced then,” he noted.
While capacity was slashed by 95% during the pandemic due to border closures, the current scenario is more comparable to previous crises:
- Post-9/11: Recovery took approximately four months.
- 2008-2009 Financial Crisis: Market restoration took between 10 and 12 months.
Market Reaction and Optimism for Gulf Hubs
The prospect of safe passage through Hormuz triggered an immediate rally in global airline stocks. In Asia, Qantas Airways rose more than 9%, followed by Cathay Pacific (5%) and IndiGo (10%). In Europe, optimism was even higher, with Wizz Air and Air France-KLM climbing 14%, while groups such as IAG (owner of Iberia and British Airways) and Lufthansa recorded gains between 8% and 10%.
Regarding Gulf carriers, which accounted for 14.6% of international capacity last year, Walsh remained optimistic. Although some of their capacity has been temporarily covered by operators from other regions, these cannot replace the total volume of the Middle Eastern giants. The region’s hubs are expected to recover quickly once the flow of refined products stabilizes.
Short-Term Outlook
IATA estimates that countries like India and Nigeria could increase production of refined products in the interim, while China and South Korea are expected to resume exports once crude flow becomes consistent. Operating data from April and May will be fundamental in determining the true magnitude of the disruption and the speed of the industry’s recovery.
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