The surge in fuel prices because of the war in Iran is starting to put significant pressure on airlines, truckers and the public.
The conflict has effectively frozen shipments through the Strait of Hormuz, a conduit for about one-fifth of the world’s oil. President Trump’s statement on Monday that the war would soon end sent oil prices down but they remain a lot higher than they were before the United States and Israel started attacking Iran on Feb. 28.
If these higher fuel prices persist for weeks or months, airlines, truckers, shipping companies and other businesses will be forced to pass on some of those costs to their customers, causing more widespread economic pain.
The price of jet fuel appears to have risen the most, according to Matthew Kohlman, who focuses on oil product prices in the Americas for Platts, part of S&P Global. “While crude, gasoline and diesel have spiked considerably, they have not approached or broken record highs like jet fuel markets,” he said in a statement.
The last time jet fuel prices approached or exceeded the current highs was in 2022, shortly after Russia invaded Ukraine.
The closure of the Strait of Hormuz, on Iran’s southern coast, is particularly troubling for Europe, which became more reliant on jet fuel imports as some of its refineries closed in recent years, said Amaar Khan, European head of jet fuel pricing for Argus Media. About half of the continent’s jet fuel imports come from the Middle East.
“That is an incredibly large amount of supply that is now in danger and it’s very unlikely that we’ll be able to recover those volumes from other areas of the world, especially when we consider the Americas and Asia-Pacific are now looking to safeguard their own supply,” he said.
Many European airlines are at least somewhat protected from rising costs because they lock in fuel prices through the use of futures contracts and other hedging techniques. Many U.S. carriers, however, do not use hedges and may be more vulnerable to surging fuel prices.
The chief executive of United Airlines, Scott Kirby, said at an event last week that higher fuel prices would have a “meaningful” impact on the company’s financial results in the first quarter of the year, according to CNBC.
The conflict has also contributed to a rise in gasoline prices. The average price of U.S. gasoline reached $3.54 a gallon on Tuesday, according to the AAA motor club. That is a 19 percent increase since the first U.S.-Israeli attacks on Iran on Feb. 28. Gas hasn’t been at these levels since 2024.
As of November, the cost of crude oil accounted for about 50 percent of the price of a gallon of regular gasoline in the United States, according to the Energy Information Administration.
When fuel prices go up, consumers feel it at the pump and when higher transportation costs raise the prices of other goods like food and clothes.
“Because oil is pretty cheap to move around, every barrel of oil competes with every other barrel of oil in the world,” said Christopher Knittel, associate dean for climate and sustainability at M.I.T.
Since Feb. 28, the average cost of diesel, used to fuel trucks, has risen by more than a dollar, or 27 percent, to $4.78 a gallon, according to AAA. Truckers typically pass on at least some of the higher fuel costs to retailers, restaurants and other customers. And those companies will most likely pass on a portion of higher trucking rates to consumers.
Jason Miller, a professor of supply chain management at Michigan State University, said the recent jump in the diesel price “would meaningfully affect shippers’ freight bills,” but added that the increase would vary across the trucking sector.
Mr. Miller said the spike in the diesel price has come as the trucking industry was beginning to recover from three tough years, when it was forced to cut jobs and operate fewer trucks. Fuel costs are equivalent to about 9 percent of trucking companies’ revenue, compared with 28 percent for wages and other employment costs, according to federal data.
Neri Diaz, the chief executive of Harbor Pride Logistics, a Los Angeles trucking company, said he was planning to add a fuel surcharge. It would cover about half the extra fuel cost, meaning his business would absorb the rest. He said that while customers resist rate increases, they are more likely to accept temporary surcharges. “So they don’t push back that much,” he said.
Mr. Diaz has 12 electric trucks and 30 diesel trucks. The electric trucks have shielded Harbor Pride from some of the rise in fuel costs because electricity rates have not gone up in recent weeks, he said.
The cost of shipping containers across the ocean has fallen this year, but ocean carriers have recently announced that fuel surcharges will be imposed later this month. On Tuesday, China’s Ministry of Transportation said that it had held talks with officials from Maersk and MSC, two large European shipping lines, about their international shipping operations. It did not elaborate, and Maersk and MSC did not immediately comment about the talks.
Many European airlines are also somewhat protected from rising costs because they hedge fuel prices. Lufthansa Group, which owns its namesake airline and several others, said last week that it had hedges covering about 82 percent of the fuel needs of its passenger airlines for the rest of the year. Air France-KLM said last month that it had increased its fuel hedging substantially, covering nearly 90 percent of the fuel it uses in a year.
“I think this is giving us robustness in this very, let’s say, dynamic world,” Steve Zaat, Air France-KLM’s chief financial officer, said on a call last month.
Hedging allows airlines to better plan for fuel costs, one of their biggest expenses. But airlines generally hedge only some fuel costs and the practice does not perfectly offset price hikes, according to Mr. Khan of Argus.
In the United States, airlines generally abandoned hedging years ago, with executives saying that the practice was too expensive and worked poorly when fuel costs were low or falling. Fuel typically accounts for about 20 to 30 percent of an airline’s operating costs, experts said.
Delta Air Lines owns an oil refinery in Pennsylvania that supplies jet fuel to its planes in the Northeast. But the airline is still subject to global commodity prices, and a sustained one cent increase in the cost of a gallon of jet fuel translates to about $40 million in annual expense, Delta said in a recent securities filing. American and United have said that a similar price increase would raise their expenses by $50 million.
Airlines may have to absorb rising fuel costs for now because tickets for flights in the coming weeks have mostly been sold. For flights further out, carriers could raise fares across the board, but they may opt for other options, said John Strickland, an aviation industry consultant.
Typically, prices rise as planes fill up. If a flight fills up quickly, carriers could choose to raise fares only on the last tickets they sell. But on routes where demand is weaker or competition is intense, they may refrain from raising prices or make more seats available at lower fares.
“If you’ve got a flight expecting to have a very poor load, then you don’t really want to turn away anybody,” said Mr. Strickland.
Niraj Chokshi is a Times reporter who writes about aviation, rail and other transportation industries.
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