Jet fuel supply concerns grow with Iran war as airlines cut flights

The surging price of jet fuel isn’t the airline industry’s only problem. Now, it’s whether it will have enough.

Since the U.S. and Israel attacked Iran on Feb. 28, the price of jet fuel in the U.S. has nearly doubled, going from $2.50 a gallon on Feb. 27 to $4.88 a gallon on April 2, with the increases even sharper in other regions. The effective closure of the Strait of Hormuz is choking off supplies of both crude and refined products like jet fuel, further driving up the price.

That’s forcing airlines to consider cutting flights, especially overseas.

Carsten Spohr, CEO of Germany’s Deutsche Lufthansa, told employees in a webcast last week that the carrier is assigning teams to come up with contingency plans because of the war in the Middle East, including for drops in demand or a lack of jet fuel, a spokesman said. Those plans could include grounding some of its aircraft.

The U.S. produces a lot of jet fuel and isn’t as exposed as other regions like Europe and parts of Asia are in comparison. But aircraft fill up locally, so some U.S. airlines could face shortages on international trips.

United Airlines CEO Scott Kirby told reporters late last month that the carrier, which has the most service to Asia among U.S. airlines, would have to cut back its flights there. He also said it’s “not impossible” that airlines collectively would have to reduce service in that region.

He noted that as the price of jet fuel goes up, it could be more acute in parts of the U.S. that aren’t as connected by pipelines.

“There’s not enough refining capacity, and so fuel price prior to this and going forward is more susceptible to supply weakness on the West Coast than anywhere else in the country,” he said.

Kirby told employees earlier in March that the airline is preparing for oil to stay above $100 a barrel through 2027 and is pruning some of its flights in the near term.

“To be clear, nothing changes about our longer-term plans for aircraft deliveries or total capacity for 2027 and beyond, but there’s no point in burning cash in the near term on flying that just can’t absorb these fuel costs,” he said in a March 20 message to employees.

Investors will be listening for more insights into how the jet fuel spike could affect the industry as airline earnings kick off Wednesday with Delta Air Lines. That carrier owns a refinery, so it could benefit from jet fuel sales.

Delta on Tuesday raised checked bag fees, joining JetBlue Airways and United, which did the same last week.

The strong demand, particularly compared with this time last year could further insulate airlines, at least in the U.S. Last year, bookings fell as President Donald Trump‘s trade war kicked off with steep tariffs, markets sank and layoffs within the government, led by Elon Musk‘s so-called Department of Government Efficiency, took effect.

“The positive commentary on demand is still holding, but fuel at $4/4.50 [a gallon] for longer isn’t something airlines can pass through,” said Savanthi Syth, an airline analyst at Raymond James. “If fuel stays high, you’ll just see capacity being cut.”

Airlines could see a bigger problem if higher gasoline prices and other pressures on consumers cause a pullback in spending.

“We’re watching the airlines very closely right now. This doesn’t have to go on too terribly long at these [fuel price] levels before you start to see potential for ratings pressures,” said Joseph Rohlena, senior director at Fitch Ratings who covers U.S. airlines.