Rico Luman, Senior Economist for Transport & Logistics at ING Research, noted that while the reopening is a positive development, it won’t provide immediate relief to fuel markets. “We need to see if this leads to a full resumption of trade,” he stated, adding that even when shipping resumes, “it will take a couple of weeks for supplies to reach Europe.”
Iran’s Foreign Minister Abbas Araghchi has announced that the Strait of Hormuz is open for commercial vessels for the length of the ceasefire ending on April 22. US President Donald Trump also declared via social media that Iran had made the route “fully open and ready for passage,” causing a significant drop in crude oil prices and a surge in Wall Street equities.
However, Luman warned that the market remains in a transitional phase, with inventories being depleted after weeks of disruption. “Currently, we are drawing down inventories. Stocks are declining due to disrupted supplies from the Middle East,” he remarked. He further noted that the tight availability of jet fuel is likely to maintain elevated prices in the coming weeks, even as conditions gradually improve.
The supply lag is critical for Europe, which relies on West Asia for nearly three-quarters of its jet fuel imports, especially as it enters the busy summer travel season. Higher fuel costs are already impacting airline operations, with some carriers cutting routes to maintain profitability.
Aviation expert Captain Richard Levy mentioned that the strait’s reopening has averted a more severe crisis. “The news is excellent right now,” he said, highlighting that major economies, including Europe, the United States, and Asia, have enough reserves from prior shipments to last about six weeks. “Had the Strait of Hormuz not reopened, shortages would have emerged around May–June, followed by price hikes and service reductions.”
Levy added that despite slowed fuel deliveries, major global carriers such as American Airlines, Delta, United Airlines, British Airways, Lufthansa, and KLM are continuing normal operations, with major hubs like Heathrow, Schiphol, and Frankfurt receiving consistent supplies. However, airfares have risen in response to increased fuel costs.
“Airfares have risen due to fuel prices, but as supply improves, prices should decrease,” he stated, expressing optimism that the summer travel season will proceed smoothly, even if fares remain high in the short term.
This reopening coincides with broader geopolitical developments, including a ceasefire between the US and Iran, and a separate truce between Israel and Lebanon. While these developments have enhanced sentiment in energy markets, uncertainties linger regarding the longevity of the agreements and the speed with which supply chains can be restored.
The International Energy Agency previously warned that Europe might face jet fuel shortages in six weeks if disruptions continued, potentially leading to flight cancellations during the peak travel season. Although increased US exports have offered some relief, they are insufficient to fully compensate for the lost supplies from West Asia.
Fuel expenses, which constitute 20% to 40% of airline operating costs, have surged recently, with prices doubling month-on-month in March. The impact is already evident across the aviation and hospitality sectors, with potential implications for broader economic growth, particularly in developing regions.
Also Read | Crude oil prices may stay at $90–100/bbl even if Iran conflict eases: ING’s James Knightley
Luman indicated that the recent upheaval is likely to expedite interest in alternative energy avenues, including nuclear and renewables, though transitions will require time. Levy, however, emphasized that in aviation, jet fuel will remain crucial for decades, as there is currently no viable large-scale alternative available.
For now, while the Strait of Hormuz’s reopening has mitigated the risk of an imminent aviation crisis, high jet fuel prices and supply constraints are expected to endure in the near term, continuing to exert pressure on airlines and travelers alike.
