The director general of the International Air Transport Association, Willie Walsh, cautioned on Wednesday that even if the Strait of Hormuz is reopened by Iran, disruptions to refining capacity in the Middle East mean jet fuel supply will take months to stabilise.
Oil prices dropped below $100 per barrel after Donald Trump announced a two-week ceasefire agreement with Iran, contingent on the immediate and secure reopening of the vital shipping route, which typically handles around one-fifth of global oil trade.
The head of a global airline industry body told reporters in Singapore that while crude prices may ease, jet fuel costs are expected to remain somewhat elevated due to refinery disruptions.
“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 already begun adjusting operations, cutting flight frequencies, carrying additional fuel from origin airports, and introducing refuelling stops as constrained supply pushes costs higher. These challenges add to existing strain on the aviation sector, which has been grappling with a sharp rise in jet fuel prices.
The impact has been particularly severe in lower-income, import-reliant markets such as Vietnam, Myanmar, and Pakistan. Supply pressures intensified after China and Thailand halted jet fuel exports, while South Korea limited shipments to last year’s levels.
Walsh noted that a resumption of crude flows could prompt key exporters to resume shipments of refined products. He expressed optimism that China and South Korea might restart exports under such conditions.
“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.
