SunSirs: Soaring Jet Fuel Prices Hit the Global Aviation Market

The current situation in the Middle East has severely disrupted global energy supplies, with the aviation industry bearing the brunt of the pressure. According to a report by Yonhap News Agency on the 27th, data from the International Air Transport Association (IATA) shows that between the 14th and 20th, the average price of aviation fuel in the Asia-Pacific region was $204.95 per barrel, up 16.6% from the previous week and a staggering 129.8% increase from the average price of the previous month. According to The New York Times, the pace and magnitude of the rise in jet fuel prices have far exceeded those of Brent crude, the global benchmark for oil prices. Last Thursday, Brent crude settled at $108.65 per barrel, up about 50% since the outbreak of the Middle East conflict.

The steeper rise in jet fuel prices is primarily driven by two factors: First, jet fuel quality standards are stricter than those for other fuels, and it must be stored in specialized tanks. Storage costs are high, and the fuel cannot be stored for long periods, resulting in limited inventory buffers. Second, crude oil-producing countries are often not refining nations. For example, South Korea is a major exporter of jet fuel but heavily relies on imported crude oil, a significant portion of which must pass through the Strait of Hormuz.

Governments across Asia have already taken precautionary measures to prevent jet fuel shortages. The New York Times reported that countries such as South Korea and Thailand have begun restricting exports. Thailand’s Bangkok Post noted that there are increasing signs that Asian nations are stockpiling jet fuel following the surge in oil prices triggered by the Middle East crisis, reflecting the growing pressure facing the aviation industry.

South Korea’s JoongAng Ilbo reported on the 27th that major South Korean airlines will significantly raise fuel surcharges starting in April. Asiana Airlines has increased fuel surcharges for international routes in April by more than 220% compared to the previous month, and Korean Air is also expected to implement a similar increase. Additionally, due to the sharp rise in jet fuel costs, Premier Air has decided to further reduce its routes starting in May. Zhen Airlines has decided to suspend 45 round-trip flights across eight routes from April 4 to 30.

Similar situations have emerged in some other countries. Vietnam Airlines has suspended some domestic routes, while the low-cost carrier VietJet Air has reduced the frequency of some international flights. Air New Zealand has canceled 1,100 domestic flights. Meanwhile, Sydney Airport has warned that it cannot guarantee the normal supply of jet fuel at Australia’s largest entry point next month.

Saudi Arabia’s *Arab News* reported on the 27th that since the U.S. and Israel launched strikes against Iran, the resulting turmoil has led to the cancellation of approximately 70,000 flights, exposing the fragility of the global aviation network.

Since jet fuel costs account for about one-third of airlines’ operating expenses, carriers have begun passing these costs on to passengers. According to an analysis by Alton Aviation Consulting, average ticket prices on seven popular routes from the Asia-Pacific to Europe in June this year rose by about 70% compared to last year; the average fare for the Sydney-London route has exceeded $1,500, nearly double the price from the same period last year.

Lex, a senior oil analyst at energy analysis firm Sparta Commodities, believes that if the Strait of Hormuz remains closed, Europe will face a jet fuel supply shortage in May. He stated that no matter what measures European refineries take—increasing operating rates, postponing maintenance, or adjusting production mixes to increase the proportion of jet fuel—they will be unable to make up for the supply gap caused by the closure of the Strait of Hormuz. The United States also faces the risk of potential supply disruptions. According to data from the U.S. Energy Information Administration, by 2025, jet fuel imports to the U.S. West Coast, Hawaii, and Alaska will account for more than 18% of total consumption, with the vast majority of these imports originating from South Korea.

Orkhan Rustamov, founder and CEO of commodities trading firm Alkagesta, said that even if tensions in the Middle East ease, the jet fuel market will not recover immediately. He told Bloomberg: “It takes time for trade flows to return to normal, for refineries to adjust production, and for airlines to reschedule their flight schedules; there is a clear lag effect throughout the process.”

As an integrated internet platform providing benchmark prices, on March 31, the benchmark price for fuel oil from SunSirs stood at 6,587.50 RMB/ton, representing an increase of 21.43% compared to the beginning of the month (5,425.00 RMB/ton).

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