Global Jet Fuel Supply Chain Disruption - March 2026

The closure of the Strait of Hormuz following the US-Israeli military strikes on Iran in late February 2026 has triggered one of the most severe aviation fuel supply crises in modern history. The disruption has sent jet fuel prices to record levels, forced airlines to cancel thousands of flights worldwide, and prompted several major refining nations to impose export bans on refined petroleum products including aviation kerosene.

The Strait of Hormuz is the world's most critical chokepoint for energy trade. Approximately 20% of global crude oil supply and 20% of liquefied natural gas shipments pass through its waters daily. For the aviation fuel market specifically, the Gulf region has long served as the principal source of jet fuel exports globally, with its crude oil and refinery configuration generating large volumes of middle distillates. Kuwait alone has at times supplied roughly 25% of European jet fuel imports, and in early 2026 there were weeks when European aviation fuel imports came exclusively from Kuwaiti sources.

The immediate effect on jet fuel markets has been dramatic. Aviation kerosene prices in the Singapore benchmark market surged from approximately $83 to $89 per barrel in January and February 2026 to $231.42 per barrel in early March 2026. In Asia, crack spreads briefly spiked to $79 per barrel before settling around $40 per barrel. In Europe, the situation has been more persistent, with jet fuel crack spreads holding at $65 to $68 per barrel. The European jet-diesel price spread, which normally fluctuates between minus $5 and plus $2 per barrel, surged to an unprecedented plus $48 per barrel, indicating a deep structural shortage rather than temporary market volatility.

About 30% of Europe's jet fuel imports normally arrive from the Gulf region. With tankers loaded with aviation fuel trapped inside the Persian Gulf and shipping companies unwilling to risk transiting the strait due to safety concerns and soaring insurance premiums, Europe now faces both severe price increases and the risk of physical supply shortages. The International Air Transport Association (IATA) estimated that airline ticket prices could rise by at least 9% globally, while fuel typically accounts for about 25% of an airline's operating costs. Some carriers reported that their fuel expenditure had effectively doubled.

Several countries have imposed export restrictions on refined petroleum products, including jet fuel, to protect their domestic supply. China's National Development and Reform Commission (NDRC) issued an immediate ban on all refined fuel exports effective March 11, 2026, covering gasoline, diesel, and aviation fuel. The ban applies to all shipments that had not cleared customs by that date, though jet fuel for aviation bunkering purposes was exempted. China is one of Asia's top three fuel exporters, and in 2025 the country exported around 41 million metric tons of clean oil products. The halt has had a particularly severe impact on Australia, which sources approximately 30% of its aviation fuel from Chinese refineries.

Thailand became one of the first countries to formally restrict fuel exports. On March 6, 2026, Prime Minister Anutin Charnvirakul signed an order published in the Royal Gazette banning the export of refined petroleum products, including gasoline, diesel, and Jet A-1 aviation fuel, with exceptions only for exports to Laos and Myanmar. The order also requires fuel traders to maintain increased domestic reserves, starting at 1.5% of production from March 31 and rising to 3% from April 30, 2026.

South Korea, the world's fifth-largest crude oil importer and a major refined fuel exporter, has been under pressure to restrict exports as well. By mid-March 2026, South Korean jet fuel exports had already slowed to roughly half the pace of the previous year. The South Korean government was reported to be in discussions with domestic refineries about a potential formal export ban. This slowdown is particularly problematic for the US West Coast, which relies on South Korea for approximately 85% of its jet fuel imports.

The ripple effects across the aviation industry have been significant. Air New Zealand announced on March 12, 2026 that it would cancel approximately 1,100 flights through early May, affecting around 44,000 passengers. The airline's chief executive described jet fuel prices as unprecedented, noting that the normal price of about $85 per barrel had roughly doubled. Pakistan's Civil Aviation Authority issued a NOTAM (Notice to Air Missions) on March 13, 2026, warning airlines that Jet A-1 fuel supplies at Karachi and Lahore airports were facing disruptions and advising carriers to carry maximum fuel from abroad.

Vietnam's Civil Aviation Authority warned that the country could face jet fuel shortages from April 2026 onward. Vietnam imports about 70% of its aviation fuel demand, with more than 60% sourced from Thailand and China, both of which have now restricted exports. Vietnamese carriers including Vietnam Airlines and VietJet Air reported that if prices remained between $200 and $230 per barrel, their monthly operating costs could increase by 30% to 60%.

Australia's position is particularly precarious. The country has virtually no domestic jet fuel refining capacity, and as of mid-March 2026, the Department of Industry, Science and Resources confirmed only 29 to 32 days of aviation fuel in reserve, approximately 802 million litres. Sydney Airport operates with zero refinery capacity and is entirely dependent on imported jet fuel. If deliveries stop, airport fuel reserves would run low within weeks.

India introduced fuel surcharges across all Air India flights starting March 12, 2026, with domestic surcharges set at 399 rupees and international surcharges ranging from $10 to $200 depending on the destination. Aviation turbine fuel accounts for roughly 40% of Indian airline operating costs, and the combination of global price spikes with high domestic excise duties and VAT has placed extreme pressure on carriers.

Airlines across Europe, Scandinavia, Asia, and Oceania have implemented fare increases and fuel surcharges. Major carriers including Lufthansa, Ryanair, Air France-KLM, SAS, and Thai Airways have adjusted pricing. Some airlines benefit from hedging programs that provide short-term insulation against spot market prices. However, analysts warn that if the conflict persists and prices remain in the $150 to $200 per barrel range, fare increases will become unavoidable across all service classes.

The crisis has also exposed structural vulnerabilities in global jet fuel supply chains. Unlike crude oil or gasoline, aviation kerosene typically sits in storage for only about one month of demand. This low inventory profile, combined with supply chains designed for continuous tanker deliveries rather than long-term storage, means that disruptions propagate through the system rapidly. The concentration of refining capacity in Asia and the Gulf region, combined with the limited number of alternative export routes, leaves many countries with few options to replace lost supply in the short term.

Saudi Arabia has attempted to reroute some crude exports through its Red Sea port at Yanbu, bypassing the Strait of Hormuz. Pakistan has formally requested Saudi Arabia to redirect oil shipments through this alternative route. Japan, which depends on the Middle East for over 90% of its crude oil, has authorized the release of strategic petroleum reserves to stabilize domestic supply and support refinery operations. The International Energy Agency agreed to release 400 million barrels of oil, the largest coordinated release in its history, in an effort to stabilize crude prices.

As of March 15, 2026, the crisis remains unresolved. The Strait of Hormuz continues to be effectively closed to most commercial traffic, with only a handful of vessels managing to transit under specific arrangements with Iranian authorities. The United States has proposed naval escorts for tankers and offered political risk insurance through the Development Finance Corporation, but shipping companies have been reluctant to resume transits given ongoing safety risks. The US military bombed sites on Kharg Island, Iran's main oil export terminal, on March 15, further escalating tensions. Market analysts suggest that a meaningful resolution depends entirely on the reopening of the Strait, and until that occurs, the global aviation fuel supply chain will continue to operate under severe stress.