Prolonged Jet Fuel Shortages Expected After Strait of Hormuz Reopens

The head of the International Air Transport Association warned that normal jet fuel flows could take months to return. Willie Walsh said disruptions to Middle East refining capacity are the main obstacle.

Why recovery will be slow

Walsh stressed that reopening the Strait of Hormuz would not immediately restore supplies. He said refining output must ramp up after weeks of disruption.

IATA highlights that the Middle East is critical to global refined product supplies. That regional damage complicates any near-term fix.

Market stress and airline impacts

Airlines have seen profitability fall sharply. Many carriers raised air fares and grounded flights to limit financial losses.

Soaring aviation fuel costs have more than doubled in one month. The product market faces greater stress than crude markets.

Premiums and cracks

Jet and diesel premiums over Brent climbed to very high levels. Jet fuel cracks showed the most acute pressure.

These elevated crack spreads increase the incentive for refineries to shift output toward jet fuel.

Price data and regional differences

IATA data show jet fuel prices up 132.1% from a year earlier. The global average stands at $209 per barrel.

Even the lowest regional price is more than 100% higher than last year. Consumers and airlines face continued price pain.

Outlook

IATA expects that refining capacity can respond once crude flows resume. But the association warned production increases will take time.

Prolonged jet fuel shortages are expected after the Strait of Hormuz reopens, the group said. Elevated margins should encourage refineries to boost jet output.

Reporting for Filmogaz.com.