The Iran conflict has driven jet fuel prices from a pre-war baseline of $85-$90 per barrel to $150-$200, disrupting key Middle East supply routes including the Strait of Hormuz and prompting airlines worldwide to raise fares and add surcharges. Qantas Airways, SAS, Air New Zealand, Lufthansa, Ryanair, Air Canada, Finnair, WestJet, and IAG have announced price adjustments or suspended financial outlooks amid the surge.
Pre-conflict Brent crude stood at $72.52 per barrel with jet fuel at $91, yielding a crack spread of $18.48 per barrel; by March 9, jet fuel reached $173.91 per barrel despite Brent at $93.32, compressing the spread to 3.7 times the norm. Middle East exports account for 17% of global jet fuel consumption, or 1.1 million barrels daily, with vulnerabilities amplified by thin inventories and specialized storage needs.
Hedging provides partial protection: SAS has no fuel hedged for the next 12 months, Air Canada a small short-term portion, Finnair over 80% for Q1, and IAG 62% for 2026. Business aviation faces 35-45% cost exposure, rendering pre-February 28 quotes loss-making. Kuwait’s output cuts and hoarding in Asia exacerbate shortages, while reduced airspace from the ongoing Ukraine war compounds route inefficiencies for European carriers.
Airlines prioritize surcharges, route cuts, deferred launches, and accelerated retirement of inefficient aircraft to safeguard margins, as passenger demand outpaces capacity growth.