Overview
This week (November 2-8), the global jet fuel market is navigating a rare intersection of extremes: crude oil prices suffered their biggest one-day collapse in months, while jet fuel crack spreads — the refiner margin between aviation kerosene and crude — remain near historic highs, signalling acute product-level tightness that a cheaper crude barrel alone cannot resolve. The trigger for the crude selloff was diplomatic: on Monday, November 2, Iran and Qatar resumed talks and Washington and Tehran again indicated a willingness to pursue a negotiated solution, unwinding part of the geopolitical risk premium that had pushed Brent to nearly $120 a barrel just days earlier. December WTI plunged $7.66, or 7.36%, to settle at $96.46, while January Brent fell $8.66, or 7.63%, to $104.77. Yet the aviation fuel complex is responding far more cautiously, because the forces squeezing kerosene supply are physical, not merely perceptual: a Strait of Hormuz still severely restricted, Middle East refinery output cut by a quarter, a Russian jet fuel export ban extended to late November, fresh Ukrainian strikes on major Russian refineries, and Gulf-loading bottlenecks that leave European and Asian importers scrambling for cargoes. IATA’s fuel fact sheet already forecast jet fuel to average $152 a barrel in 2026, almost 70% above 2025, with crack spreads at a historic average of $57 a barrel. This week’s crude crash eases the headline cost, but the structural question — can the world’s refineries and tankers physically deliver enough kerosene to a growing airline industry? — remains the defining issue for the jet fuel market, for airline finances, and for the price of a plane ticket.
1. This week in prices: crude crashes, jet fuel digs in
Monday’s collapse in crude was the week’s defining macro event. With Iran and Qatar resuming negotiations and the US and Iran seeking a diplomatic path, the market repriced the probability of a prolonged disruption of the Strait of Hormuz, and the geopolitical premium accumulated since February unwound with unusual speed. WTI fell through $100 a barrel intraday for the first time since the escalation, and Brent settled below $105. European travel and leisure shares jumped roughly 3% — their biggest one-day gain since June — on expectations of lower airline fuel bills, while energy shares fell 2.3% (Anadolu).
For jet fuel, however, the price signal is more ambiguous. Spot kerosene-type jet fuel on the US Gulf Coast, as reported by the US Energy Information Administration (EIA), stood at $4.436 per gallon on Thursday, October 29 — the latest official print — equivalent to roughly $186 per barrel. That compares with Brent spot at $115.28 and WTI at $105.51 on the same day, implying a Gulf jet fuel crack spread of around $71 a barrel. Even after Monday’s crude rout, jet fuel cracks of $60-70 a barrel remain several times the historical norm; IATA notes that cracks averaged $20-30 a barrel in 2025 and have surged to $40-70 a barrel, “at times moving higher,” in 2026, driven by logistical bottlenecks and refinery constraints rather than by crude itself.
Two competing dynamics will shape the rest of the week. On the one hand, cheaper crude mechanically lowers the outright price of kerosene — most Asian jet fuel benchmarks are priced as a differential to crude, and Brazil’s Petrobras has already signalled it will review domestic prices monthly. On the other hand, if refinery throughput and export logistics remain constrained, refiners can hold cracks wide even as crude falls, meaning airlines see only partial relief. Early Asian trading on Tuesday suggested outright jet fuel offers tracking crude lower, but spot premiums for prompt cargoes in Singapore and Fujairah remained firm, a pattern consistent with a tight physical market.
Two data points due in the coming days will sharpen the picture. The EIA’s Weekly Petroleum Status Report, scheduled for release this week, will provide the first clean read of US crude and product inventories since the crash — and, critically, of the distillate pool from which jet fuel is drawn. US distillate stocks stood at 102.8 million barrels in the week to October 23, down 1.5 million barrels on the week and at levels that have repeatedly drawn attention from analysts as a thin cushion entering the winter heating season. A further draw would argue that the product market, not the headline crude number, is where the true tightness lives. Second, the market will be watching the evolution of the US-Iran diplomatic track: every headline from the talks, real or rumoured, moves the geopolitical premium, and jet fuel — the product most exposed to both crude and the physical supply chain — will move with it, amplified by the crack.
2. The crack spread: a record margin built on scarcity
The crack spread is the heart of the jet fuel market’s current story. For a refiner, the jet crack is the difference between what aviation kerosene fetches and the cost of the crude barrel that produces it — the gross margin of the jet fuel barrel. Historically, global jet fuel cracks have ranged between $10 and $25 a barrel; spikes above $30 have been rare and short-lived. In 2026, they have become the norm rather than the exception. IATA’s fuel fact sheet, updated for the June 2026 Annual General Meeting, projects an average jet fuel crack of $57 a barrel for the year — a historic high — and warns that “if the disruption persists, average jet fuel crack spreads could rise above $57 per barrel” further into the forecast horizon.
The US Gulf Coast print of roughly $71 a barrel against Brent spot is above even IATA’s pessimistic case, reflecting both the elevated global kerosene scarcity and the dislocation of Atlantic-basin supply. The EIA spot table tells the story: Gulf jet fuel moved from $4.686 a gallon on October 23 to $4.585 on October 26, $4.444 on October 27, $4.474 on October 28 and $4.436 on October 29 — a gentle drift lower that tracks the softening of crude, while the differential to crude actually widened through the week. In other words, jet fuel is falling slower than the crude it is made from, and the refiner margin is expanding at the very moment the macro headlines are all about cheaper oil.
Why does this matter beyond refiner margins? For airlines, fuel is now the single largest line item — 31.4% of operating expenses in 2026, according to IATA, up from 25.4% a year earlier — and it is priced off the crack, not off crude alone. An airline that hedges crude but not the crack, which IATA notes is the common practice because the crude market is deeper and more liquid, is precisely the airline exposed to this year’s crack explosion: the crude hedge does nothing to protect against a jet crack that has tripled. The historic tightness of the product market has therefore become a separate, structural cost problem for carriers, one that a falling crude price only partially solves.
A further twist is visible in the internal hierarchy of the distillate barrel. IATA has highlighted a “pronounced widening of the jet fuel crack relative to diesel” — the premium of kerosene over gasoil — as a signature of this crisis, driven by the specific loss of Gulf and Russian jet supply rather than a generic distillate shortage. Yet the US spot table for late October tells a more nuanced story: kerosene-type jet fuel at the Gulf Coast stood at $4.436 a gallon on October 29, while ultra-low-sulphur diesel at the Gulf Coast was $4.722 and heating oil at New York Harbor $4.657. Jet fuel trading below diesel, an inversion of the classic relationship in a peak aviation season, reflects the pull of the European heating and trucking markets for gasoil cargoes and the seasonal ramp of winter diesel demand in the northern hemisphere — meaning the middle-distillate barrel is being fought over from three directions at once: aviation demand for kerosene, heating demand for gasoil, and the structural shortage of both relative to crude. Refiners maximise the most valuable cut; with jet cracks at historic highs and diesel cracks also elevated, there is no slack cut to expand, and the marginal barrel of middle distillate simply does not exist at current rates.
3. Supply I: the Middle East, the broken heart of the global jet fuel trade
No region explains the jet fuel tightness better than the Middle East, because no region is more central to the aviation fuel trade. The Middle East ranked as the world’s largest source of aviation fuel to international markets in 2025, according to the International Energy Agency (IEA); Kuwait alone claims to have been the world’s largest jet fuel exporter that year, per the Kuwait Petroleum Corporation. When the Strait of Hormuz was effectively closed at the end of February 2026, tanker traffic through the 33-kilometre chokepoint collapsed by 70-80%, according to IATA — simultaneously cutting direct Gulf jet fuel exports and the crude feedstock on which Asian and European refiners depend. Global jet fuel exports have been cut by as much as 30% year-on-year at points during the crisis, industry trackers estimate.
The supply damage is not only logistical but physical. The Center on Global Energy Policy at Columbia University, in an August study on refined products as an energy-security blind spot, found that Middle East refinery runs fell by 27% to around 6.5 million barrels a day in the second quarter of 2026, after the closure of the strait and attacks on Gulf refineries; regional product exports, which exceeded 5 million barrels a day before the war, were sharply cut. The Middle East accounts for about 11% of world refining capacity, and much of that capacity sits on or near the Gulf coastline.
Last week brought fresh reminders of the fragility of those assets. In the early hours of October 27, a fire broke out near Saudi Arabia’s Ras Tanura export complex, the kingdom’s largest; the Houthi military spokesman claimed a ballistic missile had struck the 550,000-barrel-a-day Ras Tanura refinery, a claim Riyadh did not confirm. The Houthis had also claimed attacks on Saudi Arabia’s East-West Pipeline — the artery that bypasses Hormuz and moves crude to the Red Sea port of Yanbu — and on the Rabigh refinery days earlier. Aramco’s East-West line is reported to be running at roughly 7 million barrels a day, at capacity, which keeps some crude flowing to Red Sea export points, but the loading data tell a cautious story: Kpler analysis cited by Asharq Business showed Ras Tanura loading averaging about 2.95 million barrels a day in October 1-25, down about 29% from September. Red Sea exports are recovering, with Yanbu loading roughly 2.34 million barrels a day in the first half of October, but the system remains nowhere near its pre-war flexibility.
The consequence for jet fuel is direct: Saudi Arabia, the UAE and Kuwait are major refiners and exporters of middle distillates, and kerosene is one of the Gulf’s signature products. Every day that Hormuz transits remain heavily restricted, and every refinery that goes offline or runs below capacity, is a day of Gulf kerosene that does not reach the international market — with Europe, which sourced the majority of its jet fuel imports from the Middle East, and Asia, which relies on the Gulf for both crude and products, absorbing the largest share of the shock.
The bottleneck is visible in the market’s physical infrastructure. Fujairah, on the UAE’s Indian Ocean coast, is the Gulf’s principal product blending and storage hub and the loading point for much of the region’s jet fuel trade; monitoring data compiled by the Joint Maritime Information Centre in late October showed roughly 194 ships waiting off Fujairah and Khor Fakkan alone, part of nearly 500 vessels anchored outside the strait. A product hub is only as functional as the tanker queue in front of it, and with vessels avoiding Hormuz transits, cargoes that would normally move out of the Gulf in a matter of days are sitting in anchorage. Kuwait’s position illustrates the scale at stake: Kuwait Petroleum Corporation says Kuwait was the world’s largest jet fuel exporter in 2025, and the Gulf states together exported well over 5 million barrels a day of refined products before the war, according to Columbia’s Center on Global Energy Policy. Even a partial restoration of those flows would change the global kerosene balance within weeks; the absence of it is what keeps the market priced for scarcity.
4. Supply II: Russia’s export ban and the refinery strike campaign
The second pillar of global jet fuel supply is Russia, and its contribution has been shrinking by government decree and by drone strike alike. Moscow imposed its first-ever ban on jet fuel exports in mid-June 2026, after Ukrainian attacks on refineries caused production slumps and domestic shortages, and the restriction has been extended to run until the end of November. The measure followed a ban on diesel exports from July 8, a strategic reversal for a country that previously exported roughly half of its diesel and gasoil output, as the IEA noted. Supplies to countries with active intergovernmental agreements with Russia are exempt, but the de facto removal of a major supplier from the international jet fuel market has tightened the balance from the Baltic to the Mediterranean.
Domestically, the refinery strike campaign continues to eat into Russia’s capacity. On the night of October 30, Ukrainian drones struck the Novokuybyshevsk refinery in the Samara region, owned by state-controlled Rosneft; satellite imagery reviewed by Ukrainian media showed the AVT-9 and AVT-11 primary refining units and the diesel hydrotreating unit disabled, effectively halting primary refining at the plant. On the night of November 1, drones set fire to Lukoil’s NORSI refinery at Kstovo, near Nizhny Novgorod, one of Russia’s largest plants with an annual crude processing capacity of 15-17 million tonnes, or roughly 340,000 barrels a day. Ukrainian monitoring channels reported that three Russian refineries had been hit since Friday, October 30, collectively handling about 10% of Russia’s refining capacity and over 10% of its diesel production. Each such strike removes not only crude processing but the middle-distillate stream — diesel and kerosene — on which both the Russian domestic market and, before the bans, export markets depended.
Logistics add a further layer of friction. Loadings at the Black Sea port of Novorossiysk, a major outlet for Russian and Kazakh crude and products, were reported by traders to be backed up by almost three weeks, and Russian seaborne crude exports in November are expected to fall by 100,000-200,000 barrels a day from October. The Baltic ports of Primorsk and Ust-Luga were attacked by Ukrainian drones as early as March, briefly suspending exports. In short, the Russian leg of the global jet fuel supply chain is constrained at every stage — refining, export policy and port logistics — and none of those constraints is expected to loosen before the export ban lapses at the end of this month, at the earliest.
5. Supply III: how Asia and Europe are readjusting
With the Gulf constrained and Russia restricted, the burden of balancing the global jet fuel market has fallen on refiners elsewhere — and on the importing regions that must make do with less. The IEA has documented how refiners in Europe, Nigeria and the United States stepped in to ease major jet fuel strains in the wake of the Hormuz shock. But the readjustment is uneven and costly.
In Asia, the tightness is acute because the region’s refiners depend on Gulf crude. South Korea’s jet fuel exports fell to 6.8 million barrels in April 2026 from 8.3 million barrels a year earlier, according to the Korea Petroleum Association, with SK Energy attributing the decline to limited crude supplies; Seoul imposed export caps on gasoline but notably did not cap jet fuel, preferring to keep what kerosene it can. Chinese refiners face similar feedstock constraints, while the OPEC Monthly Oil Market Report for October noted that Singapore refining margins fell sharply and moved into negative territory month-on-month, pressured by higher feedstock and freight costs even as regional product availability improved. The negative Singapore margin is the mirror image of the record Gulf jet crack: it shows that Asian refiners are paying more for the crude and the freight than their product sales recover, a configuration that discourages the very incremental jet fuel production Asia needs. In Rotterdam, by contrast, middle-distillate margins gained, as weakness at the top and bottom of the barrel more than offset strength in the middle — a reminder that the jet fuel premium is a global phenomenon with regional colour.
For Europe, the vulnerability is import dependence: the continent sourced the majority of its jet fuel imports from the Middle East, and the IEA has highlighted European refiners as first movers in the readjustment. Europe also carries the legacy of its own refinery closures over the past decade, which had already made it structurally short of middle distillates before the crisis. The result is a market in which European airlines, though insulated by a pre-crisis hedging ratio of around 70% of fuel needs, face the reality that those hedges roll off into a permanently dearer product market.
6. Demand: passengers keep flying, fuel keeps costing
The demand side of the jet fuel balance is, unusually for an energy market in crisis, still growing. IATA’s June financial outlook for the global airline industry — the authoritative reference for 2026 — projects passenger numbers of 5.1 billion, up 2.4% on 2025, with load factors at a record 84.0%. Airlines are expected to fill more seats than ever before even as the economics of doing so deteriorate. Total industry revenues are forecast to rise 9.4% to $1.165 trillion, with ticket yields up 7%, as carriers pass through costs; yet operating expenses are rising 13%, roughly double the pace of revenue, and net profitability is halving to $23.0 billion from $45 billion in 2025, with net margin compressed to 2.0% and profit per passenger down to $4.50 from $9.10.
The fuel bill is the arithmetic behind those numbers. IATA expects airlines to spend $350 billion on fuel in 2026, up nearly 40% from $252 billion in 2025, on an unchanged volume of about 104 billion gallons. In other words, every dollar of the increase is price, not consumption. Jet fuel prices are expected to average $152 a barrel, almost 70% above 2025’s $90, with the crack at a historic $57 average, while Brent averages $95 — 37% above last year’s $69. Fuel’s share of operating costs has jumped from 25.4% to 31.4% in a single year, and a weaker US dollar only partially cushions carriers that earn in appreciating currencies.
The demand picture, however, is not uniform — and the divergence matters for where jet fuel is tightest. Middle East carriers, at the geographic centre of the war, are expected to post a collective net loss of $4.3 billion in 2026, with demand (RPK) down 11.4% and capacity down 4.4%; June data showed Middle Eastern carriers’ passenger demand down 14% while Europe-Asia traffic grew 11%, as travellers rerouted around Gulf hubs. Africa is the fastest-growing region by traffic, with RPK up 10.0% as hub carriers capture rerouted Europe-Asia flows — but African airlines’ profitability is being capped by fuel supply and price vulnerabilities. Asia-Pacific, which IATA says relies heavily on Gulf crude imports and faces “more acute pressure on refineries and jet fuel shortages… and higher jet fuel prices than in other regions,” is forecast to earn $6.6 billion, down from $9.8 billion, with RPK growth of 5.1% — the strongest among the large regions. Europe ($9.6 billion, RPK +2.8%) and North America ($9.4 billion, RPK +0.8%) round out a landscape where demand is resilient but profitability is uniformly squeezed.
Two structural notes temper the demand picture. First, fuel consumption volumes are flat: the crisis has not yet destroyed aviation demand on a global scale, in part because governments and airlines have absorbed costs through fare increases and surcharges, and in part because the rerouting of traffic around the Middle East keeps aircraft flying longer — burning more fuel per trip, which paradoxically raises jet fuel demand per passenger kilometre served. Second, the flat consumption base means the market has no slack: any incremental supply loss translates directly into price, which is precisely why cracks sit at record levels despite a falling crude complex.
The pain is most visible where the war is closest. IATA Director General Willie Walsh, presenting the June outlook, was blunt about the regional divide: “All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices… Smaller carriers that started the year with weak balance sheets are certainly struggling.” Gulf carriers, which depend on transfer traffic through hub airports, have seen their average load factor fall to 76.3% as passengers reroute around the region, and industry analysts have projected combined 2026 losses of $4.3 billion for the Gulf’s major airlines — a figure that matches, almost exactly, the $4.3 billion net loss IATA assigns to the Middle East region as a whole. For the hub model, the crisis is existential in the near term: the same geography that made Gulf airlines global leaders in connectivity has made them the first casualties of a war fought over the waterway beneath their hubs.
7. China: the exception that proves the rule
China offers a revealing case study of demand resilience and supply constraint. Sinopec’s first-half results, discussed by Caixin in August, showed domestic refined product consumption down 8.6% year-on-year — gasoline down 7.9% and diesel down 11.5% — as high oil prices and electric-vehicle substitution eroded road fuel demand. Jet fuel, by contrast, grew 1.3% year-on-year, supported by holiday travel and the recovery of international routes. Kerosene is now the rare petroleum product in China with positive volume growth, a microcosm of the global pattern: aviation is the demand engine of the oil market in 2026, and everything else is shrinking.
The cost pressure is equally visible. Chinese airlines’ comprehensive jet fuel procurement cost rose from about 5,050 yuan per tonne in early February to 5,680 yuan per tonne by late March, and carriers raised domestic fuel surcharges in April under the mechanism that links surcharges to jet fuel prices; reports of passengers pre-purchasing tickets as far ahead as December testify to the pass-through anxiety. With jet fuel consuming roughly 30% of airline costs — the fuel bill is now the dominant variable in Chinese carrier economics — the direction of jet fuel prices, more than crude, will determine whether the recovering Chinese aviation market can sustain its expansion through the fourth-quarter shoulder season and into the 2027 travel peak.
8. Downstream echoes: Brazil’s price signal, freight and the SAF paradox
The tightness is rippling through the entire aviation value chain. In Brazil, Petrobras raised the average price of aviation kerosene (QAV) sold to distributors by 7.2% effective Sunday, November 1 — about 0.45 real per litre, or $0.083 — explicitly citing the rise in international QAV quotations, driven by heightened geopolitical tensions in the Middle East and reduced Russian and Ukrainian refining capacity. The adjustment, the second consecutive monthly increase, is a clean illustration of how Gulf and Russian supply losses propagate to a domestic market on the other side of the Atlantic, where airlines have no domestic jet fuel security beyond what local refiners produce.
Freight is the second amplifier. Tanker rates for middle-distillate cargoes have risen sharply, and the OPEC report highlights freight costs as a factor pushing Singapore margins into negative territory: even where jet fuel cargoes are available, the cost of moving them has become part of the scarcity. Longer routings around the Arabian Peninsula and the Cape, insurance premiums in the Gulf and Black Sea, and the concentration of waiting ships outside Hormuz all add to the landed cost of kerosene for importers. For Europe, which imports most of its jet fuel from the Gulf, the combination of dearer product and dearer freight has pushed total landed costs to levels that even the 70% pre-crisis hedge cannot fully contain once contracts roll over.
There is also a perverse effect on the industry’s decarbonisation agenda. IATA estimates that the additional cost of Sustainable Aviation Fuel (SAF) purchases will reach $4.3 billion in 2026, for an anticipated 2.4 million tonnes — about 0.8% of total fuel consumption. But the spread between SAF and conventional jet fuel has narrowed, because conventional fuel has appreciated so much. In a market where conventional kerosene costs $150-190 a barrel, the green premium has shrunk — a reminder that the clean-fuel transition in aviation is being shaped, for now, by the price of the very fuel it is meant to replace.
9. Inventories: the thin buffer that turns shocks into spikes
The reason a modest supply loss can move jet fuel prices by double digits is that the buffer above ground is thin. The IEA has estimated that observable global oil inventories fell by about 509 million barrels between the start of the year and the end of September, to the lowest level since April 2025; the EIA’s Short-Term Energy Outlook similarly points to cumulative global draws of roughly 660 million barrels since March, nearly 60% of it from non-OECD tanks. US commercial crude stocks of 410.6 million barrels in the week to October 23 were the product of an unexpected 1.9-million-barrel draw, and the distillate pool from which jet fuel is drawn — 102.8 million barrels, down 1.5 million on the week — sits at a level that gives refiners and traders little room for error entering winter. The US Strategic Petroleum Reserve, at 282.6 million barrels, is at its lowest since October 1982 and offers no product relief. Chinese crude port inventories are similarly low, and Asian product stocks remain concentrated at hubs whose tanker queues — not tank capacity — are the binding constraint.
For jet fuel specifically, the visible scarcity signal is price structure rather than barrels. Spot kerosene in Asia has repeatedly traded at a premium to forward months, the classic signature of a market unwilling to lend inventory to the future; and the wider the backwardation in the distillate curve, the more attractive it becomes for holders to sell promptly and the less attractive it is to store cargoes against the risk of a de-escalation. That dynamic cuts both ways: it intensifies today’s scramble for prompt product, and it leaves the market with no strategic cushion if a diplomatic breakthrough does materialise. When the signal of the market is that inventory is expensive to carry, the market is one headline away from a spike — in either direction.
10. What to watch this week and beyond
For the remainder of this week, the jet fuel market is trading on a knife edge between two opposing forces. The bearish force is diplomacy: any further sign that US-Iran talks are making substantive progress would continue to unwind the geopolitical premium in crude, mechanically lowering outright jet fuel prices and giving airlines the first genuine cost relief of the year — European travel stocks’ Monday rally shows how eagerly markets anticipate exactly that. The bullish force is physics: the Gulf’s refinery and loading constraints, Russia’s export ban (running to the end of November), the fresh hits to Russian refining capacity, and the flat global consumption base all argue that the jet fuel crack will remain historically wide regardless of where crude settles. The most likely near-term configuration is falling outright prices with stubbornly wide cracks — relief for airline cash flow, but far less relief than the crude headlines imply.
Beyond the week, the market’s direction depends on five variables. First, the durability of US-Iran diplomacy: a breakthrough would reopen Hormuz traffic, releasing both Gulf crude and Gulf kerosene into the market and compressing cracks sharply, while a breakdown would re-accelerate the risk premium. Second, the fate of Russia’s jet fuel export ban at the end of November, and the intensity of the Ukrainian strike campaign in the meantime. Third, the pace of Middle East refinery recovery — whether Ras Tanura, Rabigh and other facilities return to full runs, and whether the Red Sea corridor can carry more than its current volumes. Fourth, the demand data: IATA’s updated outlook, monthly airline traffic figures and Chinese international route numbers will show whether the resilient 5.1-billion-passenger forecast survives a stagflationary macro environment in which GDP growth is slowing to 2.5% and inflation rising to 5.0%. Fifth, and most fundamentally, the physical balance: OECD and Asian product inventories, which are the ultimate arbiter of whether cracks at $57-plus are a bubble or a shortage.
Scenario thinking helps frame the possibilities. In a de-escalation case — a verified US-Iran understanding, a gradual reopening of Hormuz, and Gulf product exports recovering even partially to pre-war levels — jet fuel cracks would face their first genuine compression in months; IATA’s pre-crisis baseline of $20-30 a barrel cracks is the conceptual floor, though a return to that range would require both the Gulf and Russia to be exporting normally, which no scenario achieves before December at the earliest. In a stalemate case — talks continuing without a deal, Hormuz still restricted, Russia’s ban extended — the current configuration of high outright prices and record cracks persists, and airline cost pressure simply continues into 2027. In an escalation case — a breakdown of diplomacy, fresh attacks on Gulf facilities, or a closure of the Red Sea corridor — the crude risk premium and the product scarcity premium would compound: IATA’s warning that cracks could rise above $57 a barrel would be tested, and the aviation industry’s $350 billion fuel bill would move higher still, accelerating capacity cuts and fare increases that would ultimately feed back into demand destruction. The asymmetry of the three cases favours patience on the supply side and vigilance on the demand side: the market’s floor is firmer than its ceiling is high.
For airlines, the strategic lesson of this week is that the fuel risk of 2026 is a product-market risk, not a crude-market risk. For refiners and traders, the record cracks are the market’s way of saying that the world’s kerosene supply chain — Gulf refineries, Russian plants, Hormuz tankers, Red Sea loaders — is being asked to do more with less than at any time in decades. For passengers, the practical consequence is that fuel surcharges, fare increases and, increasingly, capacity reductions are the transmission mechanism by which a geopolitical war in the Gulf reaches the price of a ticket. Until the physical constraints loosen, jet fuel will remain the tightest major oil product in the world — expensive, volatile and strategically decisive.
(Sources: International Air Transport Association (IATA), US Energy Information Administration (EIA), International Energy Agency (IEA), Center on Global Energy Policy at Columbia University, OPEC Monthly Oil Market Report, Reuters, Anadolu Agency, Caixin, Euromaidan Press, Moscow Times, Kuwait Petroleum Corporation, Korea Petroleum Association, Petrobras.)