By Al Root
Jet fuel is becoming a problem. Right now, there is no good solution for the industry or for travelers looking for a flight deal.
"The Strait of Hormuz is also a jet fuel story," wrote Melius Research analyst James West on Monday, adding that about 15% of the barrels transiting the Strait daily are refined products, such as jet fuel.
"Crude [oil] has bypass options, but jet fuel has almost none," said West. "It must be refined from specific feedstocks at specific units and delivered into a hub network -- ARA, Singapore, Gulf -- where inventory...is already below seasonal norms."
What's more, feedstock quality is not interchangeable. Refiners in Europe use Middle Eastern oil and can't readily switch to African or U.S. crude supplies.
It all adds up to a problem for global aviation. Jet fuel prices are up 70% to 110% since fighting broke out in Iran, depending on the region, compared with a 50% rise in benchmark crude oil prices.
It means higher prices for consumers and fewer flights. (Jet fuel can account for as much as 25% of an airline's total costs.)
European carriers have canceled thousands of flights, and U.S. carriers, such as Delta Air Lines, have reduced capacity in the second quarter.
The solution is the end of the war and a resumption of oil through the Strait. Barring that, Europe will have to consider importing U.S. fuel, which would require changes to fuel standards. (U.S. and European fuel aren't exactly the same.)
There is no easy answer for the industry, one reason why stocks of airlines and aerospace companies have struggled. Since fighting broke out in Iran, the iShares Aerospace & Defense ETF was down 11% through Friday trading. The U.S. Global Jets ETF was down 9%. The S&P 500 was up 5% over the same span.
That performance isn't likely to change until investors have confidence about how and when the Iran war will end.
Maybe this is the year for a summer road trip? Ah, gasoline prices are up, too.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 04, 2026 10:19 ET (14:19 GMT)
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