Global aviation body International Air Transport Association (IATA) has warned that jet fuel supply constraints could persist for months even if Iran reopens the Strait of Hormuz, citing significant disruptions to refining capacity in the Middle East, Reuters reported.
Speaking in Singapore, IATA Director General Willie Walsh said that while crude oil flows may stabilise quickly after any reopening, the recovery in refined products such as jet fuel will take longer.
“If it were to reopen and remain open, I think it will still take a period of months to get back to where supply needs to be given the disruption to the refining capacity in the Middle East,” Walsh said.
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Jet fuel, which typically accounts for about 27% of airline operating costs, has surged sharply during the ongoing conflict. Prices have more than doubled, far outpacing the roughly 50% rise in crude oil prior to recent ceasefire developments.
Reuters reported that Iran's closure of the Strait of Hormuz had severely choked global jet fuel supplies, forcing airlines to cut flights, carry additional fuel, and reroute operations. However, optimism around a ceasefire, announced by US President Donald Trump, and the potential reopening of the key shipping route has buoyed markets.
Airline stocks rallied strongly across regions. Shares of Qantas Airways surged over 9%, while Air New Zealand rose more than 4%. Hong Kong's Cathay Pacific gained 5%, and India's IndiGo jumped as much as 10%. European carriers including Lufthansa and Air France-KLM also saw gains of up to 14%.
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Walsh downplayed comparisons with the COVID-19 crisis, noting the current disruption is far less severe.
“This is not similar to COVID… capacity reduced by 95% then. We're nowhere near that,” he said, comparing the situation instead to post-9/11 and the 2008–09 financial crisis, which saw recovery periods of four to 12 months.
While some lost capacity from Gulf carriers may be offset by other airlines, Walsh said a full replacement is unlikely. He added that countries like India and Nigeria could temporarily boost refining output, helping ease supply pressures over time.
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