Airlines hit by jet fuel surge as Iran conflict disrupts supply

"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."

"Amaar Khan, an analyst at Argus Media, said the current market dynamics were extraordinary. Even though supply risks linked to the conflict are real, he said traders believed the current price spike had become detached from normal supply-and-demand fundamentals. One trader described the situation as "absolute chaos", noting that "no fundamentals can explain these prices"."

Jet fuel prices have reached their highest levels in over three years, driven by escalating Middle East tensions and concerns about global energy supply disruptions. Aviation kerosene in European markets has climbed to pandemic-era shortage levels, creating immediate pressure on airline profitability and depressing aviation stocks. The spike is particularly severe because jet fuel prices have risen significantly faster than crude oil prices, with jet fuel increasing 23% in one week and 68% over one month, while Brent crude rose only 20% over two weeks. Market participants describe trading conditions as highly unstable and volatile, with traders struggling to price in geopolitical risks. Analysts note that current price levels appear detached from normal supply-and-demand fundamentals, with one trader calling the situation "absolute chaos." European airlines' heavy dependence on Gulf region jet fuel imports has amplified their exposure to these market shocks.

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