Jet fuel prices have topped US$200 a barrel as the fallout from the US-Israel attack on Iran continues to destabilise Middle Eastern oil production.
IATA’s Jet Fuel Price Monitor found that the average price had more than doubled, with costs surging by 58.4% on 6 March compared to the previous week. Strikes on oil production infrastructure in Iran, Qatar, and the UAE have contributed to the spike, as well as Iran’s assertion that they “will not allow even a single litre of oil” through the strategically critical Strait of Hormuz. Jet fuel already accounts for around 40% of an airline’s operating costs.
In response to the growing crisis, the International Energy Agency (IEA) have said they will release emergency reserves of 400 million oil barrels. Several airlines have confirmed they can withstand the shock because they bought their year’s stocks of fuel at a fixed price ahead of time. This includes Air France-KLM, Lufthansa, and Ryanair, all of whom have sufficient stockpiles for fares not to rise too much in the short term.
However, many airlines say they have no choice but to pass higher costs onto customers. Air India and Scandinavian Airlines (SAS) are among the carriers who say additional surcharges will be needed to cover the higher costs of operation during this turbulent period.
Meanwhile, the Gulf region continues to be impacted by air strikes and airspace closures. KLM and British Airways are among the carriers who have paused all journeys to Dubai until the end of March, usually a popular destination with business travellers and tourists. Emirates, Etihad, and Qatar Airways continue to offer an extremely limited schedule of flights aimed at repatriating passengers. Operations at Gulf Air remain completely suspended as of 11 March, since the aviation authorities do not consider it safe to reopen Bahraini airspace. The carrier have even relocated some of its fleet to Saudi Arabia to protect aircraft from potential damage.
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