Iran Ceasefire Eases Oil Prices, But Aviation Faces Prolonged Fuel Disruption
A two-week ceasefire between the U.S. and Iran has provided short-term relief to global oil markets, but aviation leaders warn the industry will continue to feel the effects of the recent fuel crisis for months.
Oil prices fell below $100 per barrel following news of the agreement and the potential reopening of the Strait of Hormuz, a critical chokepoint for global energy supply. Airline stocks rallied worldwide in response, with major carriers and travel companies posting gains across U.S., European and Asia-Pacific markets.
Despite the market reaction, the underlying challenges for aviation remain unresolved.
According to Willie Walsh, director general of the International Air Transport Association (IATA), jet fuel supply constraints will persist well beyond the ceasefire due to damage to refining capacity in the Middle East.
Even if crude flows resume quickly, “it will still take a period of months to get back to where supply needs to be,” Walsh said, noting recovery will not happen in weeks.
Jet fuel prices have more than doubled during the conflict, significantly outpacing the rise in crude oil. Fuel typically accounts for about 27% of airline operating costs, making the surge particularly difficult for carriers to absorb.
Delta Air Lines said it expects to pay about $4.30 per gallon for jet fuel in the second quarter, adding more than $2 billion in additional costs year over year. In response, airlines globally have begun cutting capacity, adjusting routes and increasing fares.
Operational impacts have been widespread. Carriers have rerouted flights around conflict zones, added refueling stops and carried extra fuel to hedge against supply uncertainty. Capacity through key Middle East hubs remains constrained, with industry leaders noting that displaced lift from Gulf carriers cannot easily be replaced.
While the ceasefire may help stabilize crude markets, refining bottlenecks continue to limit jet fuel availability. Additional supply from regions such as India and Nigeria could ease pressure over time, but any meaningful rebalancing is expected to be gradual.
The disruption is also weighing on the broader travel ecosystem. Tourism recovery in the Middle East is expected to lag, with analysts projecting several months of weakened demand as traveler confidence rebuilds. In some cases, operators are still managing operational fallout from the conflict, including repositioning assets and restarting suspended services.
Industry leaders emphasize that while the current crisis is significant, it is not on the scale of the COVID-19 downturn. Still, the path to normalization is expected to extend well beyond the ceasefire period, with elevated fuel costs, constrained capacity and volatile pricing shaping airline operations in the near term.
On the ramp: Prolonged fuel volatility is already reshaping flight schedules, aircraft utilization and turnaround planning, adding pressure on ramp teams to manage irregular operations, fuel logistics and tighter capacity environments.