Despite drop in oil prices, airline industry not out of the woods yet

Despite drop in oil prices, airline industry not out of the woods yet “If it (the Hormuz Strait) 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,” said IATA chief. Wednesday 08/04/2026 AirAsia planes stand on the tarmac at Kuala Lumpur International Airport Terminal 2 (KLIA2) in Sepang, Malaysia SINGAPORE The head of a body representing global airlines said on Wednesday that even if Iran reopened the Strait of Hormuz it would take months for jet fuel supply to recover given disruptions to Middle East refining capacity. Oil fell below $100 per barrel after US President Donald Trump said he had agreed to a two-week ceasefire with Iran that was subject to the immediate and safe reopening of the Strait of Hormuz, which normally carries about a fifth of the world’s oil trade. Willie Walsh, director general of the International Air Transport Association (IATA), told reporters in Singapore that while he expected crude oil prices to fall, jet fuel costs were likely to remain slightly elevated due to the impact on refineries. “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, which is a critical part of the global supply of refined products, and not just jet fuel for other products as well,” Walsh said. Airlines across Asia have been cutting flights, carrying extra fuel from home airports and adding refuelling stops as the Middle East conflict squeezes jet fuel supply, adding to pressure on an industry already hit by a doubling of jet fuel prices. The pain has so far been sharpest in lower-income, import-dependent markets such as Vietnam, Myanmar and Pakistan after China and Thailand halted jet fuel exports and South Korea capped them at last year’s levels. If crude started flowing again then “I would like to think” that China as well as South Korea would restart their exporting of refined products, Walsh said. “So there is (refining) capacity available once we get the crude oil flowing, but it’ll take a little bit of time, and with the crack spread elevated the way it is, I think that provides an incentive for refineries to increase the production of jet fuel,” Walsh said. The “crack spread” refers to refinery margins. Fuel prices could keep rising for months even after the Strait of Hormuz reopens, the US Energy Information Administration said on Tuesday, deviating from President Donald Trump’s assurances that consumers will see immediate relief when the war with Iran ends. The agency said full restoration of oil flows through the Strait of Hormuz will take months even after the war ends, keeping prices elevated until flows resume fully and Middle Eastern producers return to normal output. “Just as we had never before seen the strait close, we’ve never seen it reopen. What exactly that looks like remains to be seen,” the EIA said in its short-term energy outlook report. “We maintain a risk premium on crude oil prices throughout the forecast period as we expect uncertainty around future supply disruptions to keep prices above pre-conflict levels,” the EIA said. Suggested By Editor Oil prices rise as OPEC+ hikes output but warns against supply disruption Suggested By Editor Oil prices rise as OPEC+ hikes output but warns against supply disruption
2026-04-08 15:49:17