Jet fuel tightness warned

Jet fuel is tightening in Europe and parts of Asia just as airlines lock in summer schedules, raising the risk of higher fares and flight cuts. (pbs.org) Jet fuel is the kerosene-based fuel that powers commercial aircraft, and it moves from refineries to airports by ship, pipeline and storage tanks. The current squeeze followed the war with Iran and the effective closure of the Strait of Hormuz, a route that handles a large share of fuel shipments. (pbs.org) The International Energy Agency’s Fatih Birol said on April 16 that Europe had “maybe six weeks” of jet-fuel supplies left if disruption persisted. Argus Media’s European jet-fuel pricing head said about 40% of Europe’s jet-fuel imports normally pass through Hormuz, and none had moved through the strait since the war began. (pbs.org) Prices surged before any physical shortage fully hit airports. The International Air Transport Association’s fuel monitor said the global average jet-fuel price for the latest reported week was $197.83 a barrel, while Associated Press reported Argus data showing U.S. jet fuel at $4.32 a gallon on April 16, up from $2.50 before the war. (iata.org) (wtop.com) Airlines feel that shock quickly because fuel is often their biggest single expense. The International Air Transport Association says jet fuel accounts for about 30% of airline costs, which is why carriers have been raising bag fees, fuel surcharges and base fares rather than waiting for summer demand to peak. (pbs.org) Europe looks exposed because airports and airlines there depend more heavily on imported jet fuel, and analysts told CNBC the shortage could turn “systemic” within weeks. ACI Europe warned last week that shortages could hit in as little as three weeks, and Rystad Energy said severe flight cuts could start in May and June if flows do not normalize. (cnbc.com) Asia has already shown what that looks like in practice. ING’s Rico Luman told CNBC that supply constraints were already visible in countries including Vietnam and Thailand, reflecting Asia’s deeper dependence on Middle Eastern jet fuel. (cnbc.com) Canada is less exposed to outright shortages because North American carriers draw largely from Canadian and U.S. refineries, but travelers are still getting hit on price. The Canadian Press reported major airlines added fuel surcharges of $25 to $60 on some tickets, and Air Canada raised baggage fees this week. (toronto.citynews.ca) Air Canada also made one of the clearest schedule moves so far. The carrier said on April 17 it would suspend Toronto and Montreal service to New York’s John F. Kennedy International Airport from June 1 through Oct. 25, while continuing flights to LaGuardia and Newark. (wtop.com) There was some relief on April 17 when Iran’s foreign minister said the Strait of Hormuz was open again to commercial ships after a ceasefire deal, and oil prices fell the same day. But analysts told Canadian Press it would still take weeks for tanker traffic to ramp up and longer for damaged Middle East refineries to restore jet-fuel output. (toronto.citynews.ca) That leaves airlines selling summer seats before they know whether fuel flows will fully recover. If shipments resume and refineries restart, fares could stabilize; if not, the summer schedule may get smaller and more expensive. (pbs.org)