The global average jet fuel price fell 14% week on week to approximately $119 per barrel for the week ending June 19, yet European low-cost carriers face a delayed reduction in Jet A-1 costs due to a fragile Strait of Hormuz reopening, depleted inventories, and historically wide refining margins.

The International Air Transport Association (IATA) reported that while prices dropped following a June 17 ceasefire and peace memorandum between Iran and the United States, Northwest European jet fuel crack spreads remain elevated. IATA models the 2026 crack spread averaging around $57 per barrel if disruption persists, against a pre-conflict norm of roughly $30, and forecasts the global jet fuel price averaging about $152 per barrel across the year.

The operational recovery of the Strait of Hormuz remains constrained after a vessel strike off Oman on June 25 pushed crude oil prices back up. The central deep-water channel remains mined with an estimated 80 mines left to clear, a process expected to last six to eight weeks. Consequently, maritime transit is confined to coastal routes under a daily quota coordinated by Iran’s Revolutionary Guard Corps, which has kept war-risk insurance surcharges well above pre-conflict levels.

Liquidity and cash burn risks are mounting across the regional aviation sector as low-cost fuel hedges expire into the autumn. The US Energy Information Administration projects that Organisation for Economic Co-operation and Development oil inventories will fall to their lowest level since 2003, with pre-conflict volumes unlikely to return through the strait until early 2027. Refiners rebuilding strategic and commercial storage are expected to keep jet fuel prices elevated for months after tanker traffic normalises.

Hedging exposure varies significantly among European short-haul operators. Ryanair has hedged roughly 80% of its requirements at about $67 per barrel of crude through March 2027. Wizz Air  holds about 55% hedge cover for the year to March 2027, with 70% of its next six months fixed near $700 per tonne against a market rate around $1,500 per tonne. Conversely, airBaltic entered the price spike with cover in the region of 10%.

The financial impact of the ongoing fuel shock is projected to reduce global airline net profit to about $23 billion, representing a contraction of roughly 50%.