Despite Hormuz Deal, No Relief in Sight for Airlines

Airlines got some good news with the planned reopening of the Strait of Hormuz—but their fuel headache isn't going away anytime soon, reports the Wall Street Journal. Global carriers should brace for months of tight jet fuel supplies and elevated costs, even if the US-Iran agreement holds, according to International Air Transport Association chief Willie Walsh, who says the system can't reset "in weeks." "It will still take a period of months to get back to where supply needs to be," he says. In the US, jet fuel has shot up from $2.50 a gallon on the day before the war opened to $4.88 last week, reports CNBC.

The backlog starts with crude oil flows, which need time to move, be refined, and reach fuel suppliers. Asia is feeling it most: the region relies on the Strait for the bulk of its crude, and the war-driven cutoff has pushed prices higher, forced airlines from South Korea to Vietnam to pare back schedules, and prompted fuel surcharges. Europe, which gets more than a quarter of its jet fuel from Gulf producers, is seeing milder fallout thanks to widespread fuel hedging. In the US, where major carriers largely gave up hedging years ago, the impact is more direct. Delta says pricier fuel means an extra $2 billion in second-quarter costs; like United and JetBlue, it's now scaling back growth plans and tacking on new baggage fees.