Airlines are facing a sharp rise in operating costs after jet fuel prices surged to their highest level in more than three years amid escalating conflict in the Middle East, raising fears of prolonged disruption to global energy supplies.
The price of aviation kerosene in European markets has climbed to levels not seen since the shortages triggered during the Covid-19 pandemic, placing immediate pressure on airline margins and sending aviation stocks lower.
The spike has been particularly severe because jet fuel prices have moved far beyond the rise in crude oil prices. Brent crude has climbed by more than 10 per cent this week to around $78.60 per barrel and is roughly 20 per cent higher than it was a fortnight ago. However, the cost of jet fuel delivered to airlines has risen significantly faster, creating an unprecedented gap between aviation fuel and crude oil benchmarks.
According to commodity pricing specialists Argus Media, the cost of jet fuel physically supplied to airlines has increased by about 23 per cent over the past week alone. The price is now 48 per cent higher than last Friday and has surged by 68 per cent over the past month.
Market participants have described trading conditions as highly unstable. Analysts said the jet fuel market had entered a period of extreme volatility as traders struggled to price in the risks created by military tensions in the Gulf.
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