Iran War Disrupts Airlines, Jet Fuel Prices and Fares

Spike in Jet Fuel Has Political Implications

The U.S.-Iran war entered its fifth week and has severely disrupted oil supply via the Strait of Hormuz, causing a roughly 40% spike in oil prices since Feb. 28 and large increases in gasoline and jet fuel. Lawmakers led by Sen. Elizabeth Warren are urging the FTC to monitor potential price-gouging by corporations taking advantage of wartime conditions, while experts say much of the rapid price rise reflects real supply shocks and market mechanics. Airlines face sharply higher jet-fuel costs and may raise fares or add surcharges; consumers are already paying more at the pump and for travel. Key points:

• Oil and fuel price moves: Brent briefly topped $112/barrel and is trading around $103; gasoline national average reached $3.98/gal (up ~35% month-over-month); jet fuel up about 106% versus a month earlier.
• Supply shock driver: The Strait of Hormuz disruptions are causing one of the largest oil-supply shocks in history; refinery and distribution lags mean gasoline reflects higher crude with several-week delay.
• Lawmakers’ response: Sen. Elizabeth Warren and other Democrats urged the FTC to investigate price-gouging and cited risks that firms might expand margins beyond legitimate input-cost increases.
• Expert view: Some energy experts say rapid price changes are consistent with market response to an extreme supply shock rather than deliberate gouging, though nominal price increases are historically large.
• Consumer impact: Higher fuel costs are raising airline operating costs (fuel ~25% of operating costs excluding labor), likely pushing fares up (estimates range a few percent to double-digit increases for some routes) and prompting possible fuel surcharges; panic buying may amplify retail spikes.

Airlines Hedging Strategy on Jet Fuel

The recent conflict involving Iran has sent shockwaves through the energy market, forcing global airlines to pivot their fuel strategies. With jet-fuel prices doubling and reaching approximately $1,800/tonne, carriers are navigating a high-stakes choice: lock in expensive rates now or gamble on a future price drop.

While European airlines typically hedge about 80% of their annual fuel requirements, the sudden spike to $180/barrel has brought new activity to a standstill.

The Strategy: Major players like Ryanair, Lufthansa, EasyJet, and Wizz Air have largely paused new hedging. They are betting that the crisis will de-escalate, bringing summer 2027 prices back down to a projected $75–$100/barrel range.

The Risk: By waiting, these airlines lose price certainty. Some are already preemptively cutting flight capacity or bracing for significant profit hits as they are forced to purchase expensive “spot” fuel to cover the remaining 20% of their needs.

Note: The “wait-and-see” approach currently favored in Europe assumes a quick resolution. If the conflict persists, the lack of current hedging could lead to even steeper fare hikes or further reduced flight schedules.

In contrast, US-based airlines like United traditionally hedge less than their European counterparts. Their focus has shifted toward aggressive contingency planning for “worst-case” scenarios, including:

• A prolonged disruption of the Strait of Hormuz.

• Sustained oil price elevations through the peak travel season.

Jet Fuel Hording in Asia

Asia is facing growing jet-fuel supply stress as the Iran war drives oil prices higher and prompts some countries to restrict exports or hoard refined fuels. Governments from South Korea to China, Thailand and Australia are taking measures to protect domestic supplies, and airlines in the Philippines, Korea and Vietnam report potential rationing, flight cuts or operational risk. The disruption raises costs for carriers, risks to travel demand, and inflationary pressure on tourism-dependent economies. Key points:

• Rising oil prices from the Iran war have triggered jet-fuel shortages and export curbs in parts of Asia.
• South Korea is discussing redirecting export-bound jet fuel to the domestic market; officials are planning contingency measures and monitoring reserves.
• Philippine Airlines warns of possible fuel rationing; the Philippines declared a national energy emergency and is seeking supply guarantees from other countries.
• Vietnam’s aviation agency warned of potential jet-fuel shortages and flight cuts in early April.
• Regional export restrictions (China, Thailand) and temporary stock rules (Australia) aim to protect supplies but heighten market disruption.
• Higher jet-fuel costs and route disruptions may reduce travel demand and add inflationary pressure on Asia’s tourism-dependent economies.

Initial Impact on Airline Share Prices

Airline stocks plunged and airfares surged after the U.S.-Israel–Iran war pushed oil above $100/barrel (Brent briefly up ~29%), driving jet fuel costs far higher and forcing flight reroutes and cancellations. Analysts warn the higher fuel bills, constrained airspace and rerouting could trigger a sustained travel slump, grounding of aircraft for weaker carriers, and reduced leisure and business travel demand. The intitial price drop in airline stocks was around the 8th and 9th of March.

The current one-month performance of airline stocks does not look good with share price drops of up to 34%. Key US airline charts are provided here: American Airlines, Delta, and United. Of the three, Delta has preformed best due to the fact that it engages in ‘natural hedging’ since the company owns a refinery in the US. Thus, less risk of running out of jet fuel.

The initial major hit to Airline stocks occurred on the 8th and 9th of March as shares plunged and airfares surged after the U.S.-Israel–Iran war pushed oil above $100/barrel (Brent briefly up ~29%), driving jet fuel costs far higher and forcing flight reroutes and cancellations. Analysts warn the higher fuel bills, constrained airspace and rerouting could trigger a sustained travel slump, grounding of aircraft for weaker carriers, and reduced leisure and business travel demand. Key points:

• Oil jumped ~15% to over $105/barrel (Brent spiked as much as ~29%), and some jet fuel prices have doubled since the conflict began.
• Airline shares fell across Asia and Europe (e.g., Korean Air, Air New Zealand, Cathay Pacific, Air France-KLM, Lufthansa); U.S. carriers also gave up gains.
• Airfares surged dramatically (examples: Seoul–London first class rose from $564 to $4,359; other routes nearly tripled), risking sharp demand reduction for leisure and corporate travel.
• Airlines face higher operating costs from expensive fuel, longer routings, extra refueling and crew strain; weaker carriers could be forced to ground aircraft or cease operations.
• Since Feb. 28, about 40,000 Middle East flights were canceled; major carriers that link Europe–Asia/ Australasia (Emirates, Qatar, Etihad) are heavily affected.

European and U.S. Carriers

Western airlines have suffered primarily from the “fuel shock,” as Brent crude jumped above $100–$105 per barrel in March 2026.

Wizz Air: Identified by analysts as the most exposed European carrier due to high direct exposure to Israel and low profit margins, making it vulnerable to fuel spikes.

Lufthansa & Air France-KLM: Both saw shares fall between 3% and 6% as they navigated the closure of the “Gulf corridor,” forcing longer, more expensive flight paths between Europe and Asia.

U.S. Majors (Delta, American, United, JetBlue): These stocks fell between 1% and 5% in early March. Unlike many international peers, U.S. airlines largely do not hedge fuel costs, leaving them directly exposed to the 15–29% surge in oil prices.

The Most Impacted Regional & Global Carriers

Airlines with direct exposure to Middle Eastern hubs or those reliant on transcontinental routes that overfly the region have seen the steepest declines as follows: Mahan Air (main airline of Iran) lost about -35%, flydubai about -27% (Hub disruptions in Dubai), Eitihad Airways lost -26% (Abu Dhabi Hub operations curtailed), Qatar Airways lost -25% (Doha hub severely limited with many of its planes now parked in Spain), Emirates lost -21% (main airline of UAE, impacted by reduced schedules and rerouting costs). Other impacted airlines include Spice Jet of India (-10%), Korean Air (-8.6%) and Air New Zealand (-8 to 9%).