Running on Empty: How the Middle East War Is Squeezing Jet Fuel Markets, with Susan Bell

Why It Matters

Rising jet‑fuel costs threaten airline profitability, push ticket prices higher, and could dampen global travel demand, affecting both the aviation sector and broader economic activity.

Key Takeaways

• Jet fuel prices have doubled since the war began, hitting $4.50/gal.
• Middle East refinery damage removed ~300,000 barrels daily of jet supply.
• Airlines cut routes; United warns tickets could rise 20%.
• Asia faces strongest demand drop, losing ~90,000 barrels per day.
• Strategic jet fuel reserves exist, but limited to cushion shortfalls.

Summary

The podcast examines how the Middle East conflict has upended global jet‑fuel markets, pushing prices above $4.50 per gallon and prompting airlines to slash routes and raise fares. The discussion centers on a sudden loss of roughly one million barrels per day of jet‑fuel supply – half a million barrels from the closure of the Strait of Hormuz and another half from refinery outages in Asia and the Gulf.

Supply constraints are compounded by refinery damage that knocked out about 2.4 million barrels per day of capacity in the region, erasing roughly 300,000 barrels of jet‑fuel output. Demand is also weakening: Europe is down 150,000 bpd, the Middle East 250,000 bpd, and South‑Southeast Asia about 90,000 bpd, as ticket prices soar and consumers defer travel. The IEA’s Fatih Birol warned Europe could exhaust its jet‑fuel reserves within six weeks, while United Airlines’ CEO cautioned fares could climb 20 %.

Examples illustrate the pressure: Lufthansa cancelled 20,000 flights, Spirit Airlines filed for bankruptcy, and airlines are layering $50‑$60 “search charges” on tickets to cover fuel costs. Some carriers, like Delta, own small refineries as a physical hedge, but most rely on financial hedging, which leaves U.S. carriers exposed to volatile spot prices.

If the Strait of Hormuz reopens by mid‑June and normal flows resume by September, analysts expect a rapid supply rebound and a softening of jet‑fuel cracks. In the meantime, governments may tap strategic jet‑fuel reserves and consider tax relief, while airlines balance hedging, service cuts, and premium offerings to protect margins.

Original Description

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Let’s Talk Energy and take the pulse of the aviation industry as it struggles to source enough fuel as the Middle East war dries up global supplies.

Airlines are facing their biggest test since Covid. While Brent futures are up 70+% this year, jet fuel prices have doubled in Europe and risen 110% in Asia over 2025 averages.

The situation caused the CEO of United Airlines to warn ticket prices could increase by about 20%. Lufthansa canceled 20,000 flights that it said were no longer profitable. US budget carrier Spirit Airlines stopped flying altogether after declaring bankruptcy. And finally, Fatih Birol, head of the International Energy Agency (IEA), warned that Europe could start running out of jet fuel in as little as six weeks.

+ How has the war hit jet fuel supplies, and why has the price squeeze been even worse for jet than for crude?

+ How are refiners reacting to the shortage, and do high prices necessarily mean high margins for the sector?

+ What can countries do – short of grounding flights – to manage this market and help consumers cope with the runup in prices?

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Further Analysis :

- Special Report #4: Middle East conflict implications (available to non-clients): https://www.rystadenergy.com/insights/special-report-4-middle-east-conflict-implications

- Hormuz crisis reshapes clean fuel investment across the transportation space (available to non-clients): https://www.rystadenergy.com/insights/hormuz-crisis-reshapes-clean-fuel-investment-across-the-transportation-space

- AusFuel Monitor: Emergency cargoes steady Australia jet-fuel supply for now (clients only): https://portal.rystadenergy.com/article-detail/715389?qid=3a7ab30ec81f3eb415b0cdda5532d394&oid=doc_715389

- Weekly insight: Europe’s jet-fuel market tightens as replacements fall short (clients only): https://portal.rystadenergy.com/article-detail/715129?qid=3a7ab30ec81f3eb415b0cdda5532d394&oid=doc_715129

-Weekly insight: Middle East strikes force jet fuel cracks to soar (clients only): https://portal.rystadenergy.com/article-detail/693367?qid=3a7ab30ec81f3eb415b0cdda5532d394&oid=doc_693367

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Related Episodes

- What China’s oil stockpiling means for OPEC+, prices and global trade, with Lin Ye: https://www.rystadenergy.com/podcasts/what-chinas-oil-stockpiling-means-for-opec-prices-and-global-trade

- The Hormuz crisis and the real cost of a barrel of oil: https://www.rystadenergy.com/podcasts/the-hormuz-crisis-and-the-real-cost-of-a-barrel-of-oil-with-paola-rodriguez-masiu

- Asia's oil scramble is reshaping crude markets: https://www.rystadenergy.com/podcasts/asias-oil-scramble-is-reshaping-crude-markets-with-lin-ye-and-priya-walia

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🎙️Let’s Talk Energy is a Rystad Energy Production.

Produced by: Elliot Busby & Både Og.

Executive producers: Noah Brenner, Elliot Busby, Evodie Fleury-Greaker & Erik Means.

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