IATA Warns Jet Fuel Supply Recovery Could take Months Despite Hormuz Reopening

Jet fuel supply recovery is expected to take months even if the Strait of Hormuz reopens, according to the International Air Transport Association (IATA).

The disclosure was made by IATA Director-General, Willie Walsh, to reporters in Singapore, as reported by Reuters on Wednesday.

The development follows a temporary ceasefire agreement between the United States and Iran, which includes plans to reopen the critical global oil route.

What they are saying   

Walsh explained that while crude oil prices may decline following the reopening of the Strait of Hormuz, jet fuel costs are likely to remain elevated due to disruptions to refining capacity in the Middle East. He stressed that restoring supply levels would take significantly longer than reopening the shipping route itself.

• “If it (the Strait of Hormuz) 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,” Walsh said.
• He noted that the current situation is not comparable to the COVID-19 pandemic but is more aligned with shocks such as the September 11 attacks and the Global Financial Crisis.
• Walsh added that airlines across Asia have already begun adjusting operations by cutting flights, carrying extra fuel, and adding refuelling stops.

He emphasized that these operational adjustments reflect the severity of ongoing jet fuel supply constraints and the expected slow pace of recovery.

More insights

The IATA DG further noted that although some airline capacity from Gulf carriers may be temporarily affected, it cannot be fully replaced by carriers outside the region. He added that partial substitution is expected, but overall capacity gaps may persist in the short term.

• Countries such as India and Nigeria could increase the output of refined products in the short term to ease supply pressure.
• Other producers may gradually ramp up production once crude oil flows stabilize.
• Elevated refining margins are likely to incentivize increased jet fuel production globally.

He emphasized that despite these mitigating factors, the adjustment process will take time before global jet fuel supply stabilizes fully.

Get up to speed

The United States and Iran have agreed to a two-week ceasefire in the ongoing Middle East conflict, with plans to reopen the Strait of Hormuz, a key global oil route. The agreement followed a decision by U.S. President Donald Trump to suspend planned military strikes on Iran.

• Trump stated, “We will suspend attacks provided Iran agrees to the COMPLETE, IMMEDIATE, and SAFE OPENING of the strait.”
• Iran’s Supreme National Security Council confirmed acceptance of the ceasefire, noting that negotiations would begin in Islamabad.
• Iran’s Foreign Minister, Abbas Araghchi, said passage through the strait would be allowed under Iranian military oversight.
• The United Nations had warned that threats to Iranian infrastructure could violate international law, with Secretary-General António Guterres expressing concern over humanitarian risks.

The ceasefire comes amid heightened geopolitical tensions that had raised fears of major disruptions to global energy supply chains.

What you should know

The Middle East crisis, which led to the closure of the Strait of Hormuz handling about 20% of global energy shipments, has had a significant impact on the aviation sector. In Nigeria, the price of Jet A-1 fuel surged sharply during the conflict.

Jet fuel prices rose from about N950–N1,000 per litre before the conflict to over N2000 per litre by the third week.

• The Dangote Refinery accounts for over 90% of jet fuel supply in Nigeria, though prices are influenced by international indices such as Platts.
• Platts prices increased from $780–$850 per metric ton before the conflict to over $1,600 per metric ton amid scarcity and supply disruptions.
• Jet fuel marketers earlier warned that airlines may be forced to increase fares due to the surge in fuel prices.

While crude oil prices, including Brent and WTI, have declined following the ceasefire agreement, industry experts warn that jet fuel prices may remain elevated until refining capacity and supply chains fully recover.