Travelers could soon see a rise in U.S. airfares as rising global oil costs due to the Iran war boost the cost of jet fuel.
Speaking at an industry event on Thursday, United Airlines CEO Scott Kirby said rising fuel costs will have a “meaningful” impact on the carrier’s financial results this quarter, CNBC reported. He also said the impact on air ticket costs will “probably start quick.” United confirmed Kirby’s comments with CBS News.
West Texas Intermediate, the U.S. oil benchmark, shot up more than 11% on Friday to nearly $91 per barrel after President Trump demanded Iran’s “unconditional surrender,” stoking investor concerns about a prolonged conflict. Brent crude, the international benchmark, jumped to $92.47, the highest level in nearly two years.
Surging jet fuel costs
Jet fuel, which accounts for about one-fifth of airlines’ operating expenses, on Thursday cost $3.95 a gallon, up 56% from $2.50 in late February, one day before the joint U.S.-Israel attack on Iran, according to the Argus U.S. Jet Fuel Index.
The Strait of Hormuz, a vital trade route in the Middle East for oil and liquefied natural gas, is effectively closed because of the war. That supply disruption is now causing “stratospheric moves in global jet pricing,” James Noel-Beswick, head of commodities at market research firm Sparta, said in a client note this week.
Noel-Beswick also noted that jet fuel prices in Europe have hit their highest level since 2022, as airlines face “both longer flight routes and tightening supply.”
Vidya Mani, a visiting associate professor at Cornell University’s SC Johnson College of Business, told CBS News that war-related constraints on oil and gas supplies could lead to inflationary pressures across a range of goods.
“When this lasts for several weeks [or] months, the compounding effect ripples through supply chains due to the lack of energy access at major manufacturing hubs,” she said.
Lost revenue
Airlines already face lost revenue from canceled or diverted flights in the Middle East due to the war. For carriers and other oil-intensive industries, much depends on the duration of conflict, according to Fitch Ratings.
“Disruption increases operating costs through longer routings, additional technical stops, crew and staff overtime, and higher accommodation and handling expenses,” analysts with the credit bureau wrote in a report. “As well as lost revenue, airlines are likely to be affected by higher fuel prices.”
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