The Iran war and resulting closure of the Strait of Hormuz has produced a dual-track aviation crisis: a physical supply shortage threatening European and Asian carriers, and a cost shock radiating globally — including to US carriers insulated from shortages but not from price. The IEA has warned that several European countries could face jet fuel shortages within six weeks.
Over 20% of global seaborne jet fuel transits the Strait; Kuwait and Bahrain are among the major exporters now locked out of global markets. South Korea — the world’s top jet fuel exporter — relies on Middle Eastern crude inputs, creating a cascading constraint. Asian nations are already throttling jet fuel exports to protect domestic supply, compressing the global spot market further.
For US carriers, the mechanism is cost, not availability. Delta guided an incremental $2B fuel bill for 2025; United CEO Scott Kirby flagged a potential $11B additional cost on a status-quo scenario. Both carriers are cutting schedules and repricing capacity. The knock-on effect on consumer fares is already visible: Caribbean and Hawaii routes show 21–74% walk-up fare increases. The structural read is that summer 2025 is essentially locked in for disruption regardless of near-term diplomatic resolution — supply normalization is a months-long process even under an optimistic scenario.
The market’s most overlooked risk is LCC solvency. Spirit Airlines — currently in a second bankruptcy — warned fuel cost acceleration could trigger liquidation. Fitch has warned of defaults and early aircraft returns across the discount tier. A structural reduction in low-cost seat supply would reprice the entire system upward in a non-linear way — a scenario that consensus airline models are not pricing.
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