Jet Fuel Prices Double Amid Iran War, Prompting Airlines to Cut Two Million Seats

Airlines have slashed about two million seats from their May 2026 schedules over the past two weeks, responding to jet fuel shortages triggered by the Iran war that began on February 28, 2026. The Strait of Hormuz remains effectively closed, disrupting supplies from the Gulf region, which produces about one fifth of the fuel traded on international markets.

Jet fuel prices have doubled since the conflict started, pushing carriers to consolidate flights and raise fares.

The UK stands as the largest net importer of jet fuel in Europe, with high reliance on imports, poor refining capacity, and low stocks, according to Goldman Sachs. The country holds no strategic reserves, leaving commercial inventories as the sole buffer against disruptions.

Goldman Sachs analysts noted that these factors make the UK most exposed, with inventories potentially falling to critically low levels and increasing the likelihood of rationing measures.

Fuel accounts for up to a quarter of operating expenses for airlines, amplifying the impact of the shortages. IAG, the owner of British Airways, stated that it will raise ticket prices to reflect higher fuel costs. IAG added that despite its hedges, it was not immune to the broader fallout from fuel cost volatility.

4 billion increase in its jet fuel bill this year due to the price surge. These adjustments come as airlines compete for fuel produced outside the Gulf, further driving up costs.

Michael O’Leary, boss of Ryanair, told The Times on Friday that rivals were desperately searching for flights to cancel and would begin doing so within weeks. Fuel providers have informed airlines that the UK continues to have the most limited visibility in Europe on jet fuel supply. This stems from the UK's heavy dependence on Middle East imports, as highlighted by Goldman Sachs.

Grangemouth, Scotland’s only oil refinery, closed in April 2025, reducing the UK's refining capacity further. Phillips 66 recently purchased the Prax Lindsey oil refinery in North Lincolnshire, a move the company said should support UK fuel supply. Despite these developments, analysts at Goldman Sachs pointed to the closures as exacerbating the UK's vulnerability.

Sir Keir Starmer said last week that people may have to change where they go on holiday amid the disruptions. The European Commission will issue guidance on jet fuel for airlines later this week.