The impact of the Israeli-US war on Iran could cause disruptions to jet fuel supplies well into the summer travel season despite recent talks and ceasefire negotiations, experts have warned.
The conflict resulted in Iran shutting down the Strait of Hormuz, a key shipping route for a fifth of global oil. Jet fuel is second only to labour in terms of airline outlay, and accounts for over a quarter of carrier expenses. As a result, suites of commercial passenger flights were cancelled with airspace closed due to security concerns and in the ensuing scramble for fuel that saw prices double.
As ceasefire negotiations continued, Willie Walsh, director general of the International Air Transport Association (IATA) told a press conference in Singapore that even if the Strait of Hormuz were to remain open from the time of writing, “it will still take a period of months to get back to where supply needs to be.”
Ourania Georgoutsakou, managing director of Airlines for Europe, agrees, telling the media after meeting with EU officials and stakeholders: “The current situation in the Middle East and uncertainty around how long it will last are indeed raising concerns around the availability of jet fuel in Europe over the next few weeks and months.”
Analysts too note that it takes over three weeks to sail from the Arabian Gulf to Europe. That’s longer than the supplies the region has left, according to the Financial Times which has reported that the bloc is three weeks away from shortages, according to a letter to EU transport commissioner Apostolos Tzitzikostas from ACI Europe. Furthermore, the flow of exports requires empty vessels to return to the Middle East—something that insurance firms are unlikely to sanction while any ceasefire appears fragile.
It all means that even if the strait remains passable, supplies will not normalise immediately. What’s more, energy infrastructure in the region, including refineries, have been damaged, and will take time to repair.
The situation goes beyond aviation. As Travel Tomorrow reported, Asian nations have fallen back on coal in a regression of worldwide clean energy targets denounced by climate campaigners, who say that excess oil profits should be taxed to fund future resilience. And civil unrest looms: in Ireland the haulage industry and agricultural sector have blockaded key transport routes, complaining that the high fuel prices will put them out of business within weeks.
Nonetheless, Walsh has offered some hope, describing the current crisis as not as bad for aviation as COVID-19, more resembling shocks such as the 9/11 attacks on New York when recovery took about four months. Accordingly, share prices in airlines around the world have climbed as ceasefire talks have taken place, ranging from a four percent increase for Air New Zealand, to as much as a 14% gain for Air France-KLM and Wizz Air.
In addition, travel sentiment remains strong. While that may seem frivolous, travel is a sector that represents millions of jobs and over 10% of global GDP. If it can reorganise around limited supplies and offer the reassurance and flexibility that consumers are demanding, all is not, yet, lost.
