Jet fuel prices in parts of the United States have reached a new high, approaching record levels recorded following the outbreak of the US-Iran war, reviving concerns about escalating operating costs for airlines and their direct impact on travelers.
As of Thursday, the price of a gallon of jet fuel on the US Gulf Coast – the country’s market reference area – was $4.55, only about 20 cents below its peak during the conflict. In New York City, the price reached $4.75 per gallon, while prices touched or exceeded the $5 barrier in New York, Los Angeles, and the US Gulf Coast, coinciding with the issuance of strong warnings in Europe of a shortage of supplies.
These developments come amid widespread turmoil in global energy markets as a result of a shock in fuel supplies, especially diesel. Jet fuel and diesel are closely linked within the “middle distillates” category, with any slight increase in diesel production coming at the expense of jet fuel production, and vice versa. In this context, jet fuel production declined last week to its lowest level since early March, and although supplies remain high, they are approaching their usual seasonal levels, which portends the possibility of continued rise in prices.
Aviation fuel supplies were subjected to unprecedented pressure compared to other refined oil products globally, during the first months following the attacks launched by the American and Israeli sides on Iran in late February, as a result of the loss of major supplies from the Middle East and Asia, as well as limited storage capabilities for this type of fuel compared to other fuels.
The repercussions of this crisis left a heavy shadow on the aviation sector, causing great financial pressures that led to an increase in airline ticket prices, and were among the direct factors that prompted Spirit Airlines to permanently close its operations in the United States.
However, concerns had temporarily subsided throughout the summer thanks to increased production; American refineries produced more than two million barrels per day of aviation fuel for 21 consecutive weeks, a rate that had only been recorded a few times before the war, and storage tanks contained quantities exceeding the usual seasonal rates amid growing exports.
