HANOI (Bloomberg): The aviation crisis starting to grip Asia is threatening to intensify and spread to Europe and beyond, as energy turmoil caused by the Iran war collides with seasonal travel demand.
The amount of jet fuel lost because of the conflict is ultimately too much for the world’s refiners to offset.
Airlines from Vietnam to New Zealand have started canceling flights as prices surge to record highs, while China has curbed fuel exports to secure supplies. Asia has been particularly affected because of its exposure to crude oil that normally comes through the Strait of Hormuz, which has been blocked by Iran.
The European Union and the UK could be weeks away from similar conditions as they depend on supplies from refineries inside the Persian Gulf. Even in the US - a net oil exporter - some regions are reliant on vulnerable Asian supply, and carriers such as United Airlines Holdings Inc. are already responding to high prices by canceling some unprofitable services.
"You can’t fly the same amount of flights without the same amount of jet fuel,” Vikas Dwivedi, global energy strategist at Macquarie Group, said in an interview. If the Strait of Hormuz remains closed, there will be an acceleration of grounded planes over the coming weeks, he added.
Even if the vital waterway that connects oil infrastructure inside the Persian Gulf to the rest of the world is opened soon, the damage done to the global supply chain means a full recovery will take weeks or months.
While the US and Israel’s war on the Islamic Republic has severely disrupted global energy supplies, the pressure on aviation is particularly intense. Total jet fuel demand amounted to 7.8 million barrels a day last year, including kerosene - the base product, which is also used for heating.
Now, the effective closure of the Persian Gulf means a significant proportion of global shipments are stuck. At the same time, refineries in Asia have been forced to cut production due to missing crude from the Middle East. A looming shortfall means some combination of fewer flights to rein in demand and tapping oil stockpiles to bolster supply, according to oil traders and analysts.
So far, countries in the International Energy Agency have agreed to make 400 million barrels of oil available - the vast majority is crude. If recent history is any guide, only a tiny fraction of the petroleum products released will be for the aviation sector.
The result so far has been jet fuel prices surging to record highs, with some costs doubling since the start of the year. It’s outpaced gains in crude oil and many other petroleum products. On Friday, jet fuel in Europe stood at $1,713.50 a ton - the equivalent of about $215 a barrel - according to figures from General Index.
"When you’ve seen a sudden spike, it is a big challenge,” Willie Walsh, the director general of the International Air Transport Association, said on Wednesday in Dublin. "Airlines will have to pass that on to consumers in terms of higher fares. It’s inevitable.”
In March, global refinery output of jet fuel and kerosene is estimated to drop by about 600,000 barrels a day from the previous month, according to figures from Energy Aspects’ OilX service. While that’s a decline of only about 7%, it comes as demand normally ramps up ahead of peak summer travel.
More Data: BloombergNEF’s weekly jet fuel demand forecasts
Easing the crunch for now is a March decline of 400,000 barrels a day in demand from the Middle East, where airlines such as Emirates, Etihad Airways and Qatar Airways have canceled flights because of the war. Gulf carriers are now resuming flights.
All told, a total of about 37 million barrels of jet fuel and kerosene would be lost this month and next if Hormuz doesn’t reopen, according to an estimate from Eugene Lindell, head of refined products at consultancy FGE NexantECA.
"We’re so tight right now,” he said. "There’s no way to replace it.”
In Asia, governments have taken defensive measures to prevent shortages. On top of China’s move to curb exports, South Korea is discussing whether to redirect export-bound jet fuel to the local market. In Vietnam, the aviation agency warned of potential shortages from early April and is cutting flights as a result.
As the Philippines seeks to secure supplies from nations such as China and Russia, President Ferdinand Marcos Jr. told Bloomberg TV this week that grounding planes due to a squeeze is a "distinct possibility.” The country’s flag carrier, Philippine Airlines Inc., said it had managed to secure fuel until the end of June, but doesn’t have visibility after that.
Other Asian airlines are also reacting. Vietnam Airlines JSC has suspended flights on some domestic routes, while budget carrier VietJet Aviation JSC is reducing frequencies on some international flights. Air New Zealand Ltd. is canceling 1,100 domestic flights.
Sydney Airport, meanwhile, warned that there are no assurances that the country’s largest entry port will receive aviation fuel next month.
"The current shortage is uneven rather than systemic,” said Sumit Ritolia, lead research analyst for refining and modeling at analytics firm Kpler Ltd.. He noted that tightness is most acute in import-dependent regions such as southeast Asia.
While Europe doesn’t typically take as much crude oil from the Persian Gulf, it is the main importer of the region’s jet/kero. Those supplies account for about half of EU and UK imports, according to Vortexa data compiled by Bloomberg News.
Thomas Thessen, the chief analyst of Scandinavian airline SAS AB - which has cut some flights - said that the fallout from the Iran war has increased the costs of a transatlantic flight by about $300 per passenger. Since the war started, Hong Kong’s Cathay Pacific Airways Ltd. has boosted fuel surcharges on long-haul flights to about $400 per round trip.
Even for airlines that have hedged fuel prices to gird against spikes, there are still risks. If Hormuz remains closed, shortages will start to appear in Europe in May, according to Philip Jones-Lux, senior oil analyst at energy analytics firm Sparta Commodities.
Whatever action European refiners take - such as increasing runs, delaying maintenance and skewing yields toward jet fuel and kerosene production - it wouldn’t compensate for what’s lost by the closure of Hormuz, he added.
Outside the Middle East, Europe’s other main supplier is India, but getting hold of those barrels means potentially outbidding Asian buyers. Some tankers carrying jet/kero recently carried out U-turns at sea and headed east.
There’s also potential for disruption in the US, where most airlines do not hedge to the same extent as peers in Europe and Asia. That leaves them more exposed to price rises.
In terms of supplies, the West Coast, Hawaii and Alaska combined imported over 18% of the jet fuel they used in 2025, according to the Energy Information Administration. Those imports were overwhelmingly sourced from South Korea, making those parts of the US more vulnerable to supply shocks.
Even if the conflict de‑escalates, "the market won’t snap back immediately,” said Orkhan Rustamov, founder and chief executive officer of commodity trading firm Alkagesta. "There’s always a lag as trade flows normalize, refinery yields adjust, and airlines rebuild schedules.”
--With assistance from Dan Murtaugh, Will Kubzansky, Benedikt Kammel, Kate Duffy, Serene Cheong, Alex Longley and Alaric Nightingale.
-- ©2026 Bloomberg L.P.
