Jet Fuel Crunch Deepens Amid Iran Conflict, Aviation Industry at Risk

Chevron CEO Mike Wirth warned that the strain on the aviation industry could worsen in the coming weeks due to a tightening of jet fuel supplies. The situation is particularly dire because jet fuel levels were already at seasonally low levels before the Iran conflict began, leaving markets vulnerable to supply shocks.

The Strait of Hormuz, a critical oil transit choke point through which roughly one-fifth of global supply typically passes, has been disrupted due to the war with Iran. As a result, jet fuel prices have surged sharply since late February, from about $2.50 per gallon before the conflict to $4.19 per gallon as of April 24, according to Airlines for America.

Airlines are already adjusting their operations in response to higher fuel costs. United Airlines has cut about 5% of its planned capacity this year, while Delta Air Lines has trimmed growth plans by roughly 3.5 percentage points. Fuel typically accounts for about a quarter of airline operating costs, leaving carriers highly exposed to price swings.

The core issue remains disrupted energy flows through the Strait of Hormuz. Reduced shipments from Middle Eastern refiners have tightened availability across Europe and Asia. Chevron's Wirth noted that even if flows resume, it could take time for supply chains and inventories to normalize.