IATA: Jet Fuel Supply to Remain Scarce for Months Post-Hormuz Reopening

Willie Walsh, the Director-General of the International Air Transport Association (IATA), has indicated that the recovery of global jet fuel supplies will likely stretch over several months, even in the event that the Strait of Hormuz is reopened. He cited significant damage to refining capabilities in the Middle East as the primary reason for this prolonged impact on aviation fuel costs.

Speaking to journalists in Singapore on April 8, Walsh explained that while the reopening of this crucial oil transit route might alleviate crude oil supply concerns, the consequences for refined products, especially aviation fuel, would be felt for a considerable duration.

His remarks came on the heels of a substantial drop in crude oil prices, which fell by up to 16% to below $100 per barrel following an announcement by Donald Trump regarding a provisional two-week ceasefire with Iran. This agreement, however, is conditional upon the immediate and secure reopening of the Strait of Hormuz, a vital waterway through which approximately one-fifth of the world's oil is transported.

Despite the potential for improved crude oil flows, Walsh stressed that existing damage to refining infrastructure in the Middle East would continue to limit the availability of jet fuel.

"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," he stated. "This is due to the disruption to refining capacity in the Middle East, which is critical not just for jet fuel, but for other refined products as well."

The ongoing geopolitical tensions have already compelled airlines, particularly those in Asia, to implement expensive alternative strategies. Carriers are reducing flight frequencies, carrying extra fuel from their departure points, and scheduling additional refuelling stops to manage the constrained supply. These measures are being introduced as the aviation sector grapples with a doubling of jet fuel prices, exacerbating operational challenges.

The most severe effects are being felt in less affluent, import-dependent nations such as Vietnam, Myanmar, and Pakistan. These countries have been significantly impacted after major exporters like China and Thailand ceased their jet fuel exports, while South Korea limited its shipments to 2025 levels.

Walsh suggested that a resumption of crude oil shipments could encourage key suppliers like China and South Korea to resume refined product exports, thereby helping to ease supply bottlenecks. Nevertheless, he cautioned that a full recovery would not happen overnight.

"There is refining capacity available once we get crude flowing, but it will take time," he commented, adding that high crack spreads—an indicator of refining margins—could motivate refineries to increase jet fuel production over time.

Airline executives shared these apprehensions, warning that both supply scarcity and elevated prices are anticipated to persist well beyond any potential ceasefire.

During the same IATA event, Nasaruddin Bakar, the chief executive of Malaysia Aviation Group, predicted that a stabilisation in fuel prices could take "many, many more months," even if hostilities ended.

Similarly, Chai Eamsiri, CEO of Thai Airways International, described the current situation as the most severe oil shock of his nearly four-decade career, attributing its intensity to widespread infrastructure damage.

"This is the worst one," he remarked. "This time, it is about the infrastructure that was destroyed. It will take time to bring back supply, facilities, refineries, and the broader system."

The ramifications are already evident throughout the global aviation industry. AirAsia X, based in Malaysia, has raised its fares by up to 40% and introduced higher fuel surcharges to compensate for escalating costs.

In the United States, United Airlines has reduced its capacity by approximately 5%, while Air New Zealand has implemented further flight reductions and fare increases to cope with persistently high oil prices.