The ongoing war involving the United States and Israel against Iran has led to a dramatic surge in jet fuel prices, nearly doubling in the U.S. from $2.50 per gallon on February 27 to $4.88 per gallon by April 2, 2026 [1]. The closure of the Strait of Hormuz has significantly restricted supplies of crude oil and refined products, including jet fuel, intensifying the price increases, especially outside the U.S. [1]. Airlines have responded by trimming schedules, adding surcharges, and raising fees or fares to offset the soaring costs, with jet fuel now representing their largest expense after labor [1].
Carsten Spohr, CEO of Deutsche Lufthansa, revealed that the airline is developing contingency plans due to the Middle East conflict, which may include grounding some aircraft if demand drops or jet fuel becomes unavailable [1]. United Airlines CEO Scott Kirby stated that the carrier, which has the most service to Asia among U.S. airlines, will cut back flights to the region and warned that collective reductions in service may be necessary [1]. Kirby also highlighted that fuel price increases are particularly acute in parts of the U.S. lacking pipeline connectivity, such as the West Coast, and indicated that United is preparing for oil prices to remain above $100 a barrel through 2027, leading to near-term flight reductions [1].
Despite these challenges, Kirby emphasized that United's long-term plans for aircraft deliveries and total capacity for 2027 and beyond remain unchanged, but short-term adjustments are necessary to avoid unsustainable costs [1]. Airlines overall are pruning flights for the coming months, with domestic capacity growth for U.S. carriers in the second quarter now at 2.1%, down from 2.3% the previous week, and total capacity set to rise 1.1%, down from 2.4% as of March 20, according to UBS [1].
The situation introduces uncertainty regarding travel demand, as airlines frequently adjust schedules to match demand, aircraft availability, or other complications. The effective closure of the Strait of Hormuz and the ongoing conflict are expected to continue impacting fuel supply and airline operations in the near term [1].
CONCLUSION
The war in Iran has caused jet fuel prices to double, forcing airlines to cut flights, raise fares, and prepare for ongoing supply disruptions. While long-term capacity plans remain intact, the industry faces significant near-term challenges and uncertainty, with high market impact expected as airlines adapt to elevated fuel costs and potential shortages.