Hormuz Supply Shock Spreads to Jet Fuel as Airlines Cut Flights Again
nashnova research
The fuel crisis triggered by the Strait of Hormuz standoff has spread from diesel to jet fuel, with the US Gulf Coast benchmark holding at $4.44 per gallon — in the post-war high range; airlines are resuming flight cuts through year-end.
How high has jet fuel gone?
The US Gulf Coast jet-fuel benchmark hit $4.44/gal on Tuesday, down from $4.68 a week earlier and a year-to-date peak of $4.78 in early April.
The entire price band sits at levels not seen since the US-Iran war began. This means → the recent dip is relative — absolute prices remain far above pre-war norms.
In plain terms = jet fuel isn't "falling"; it moved from "extremely high" to "very high."
Why do diesel and jet fuel drag each other down?
Jet fuel and diesel are both middle distillates — products extracted from the "middle cut" of crude oil during refining — and share refinery capacity.
S&P Global Commodity Insights director James Simpson noted that diesel's market is far larger than jet fuel's, so any diesel-side swing delivers a disproportionate shock to jet fuel.
This means → when refiners push diesel output to the max, jet-fuel capacity gets squeezed — the two are zero-sum rivals for the same barrels.
US retail diesel hit an all-time high of $6.53/gal on Tuesday, up nearly $1 in a single month.
Why did refiners mis-time the switch?
Early in the war, Persian Gulf refinery shutdowns left European and Asian jet-fuel supplies critically short; the IEA warned in April that Europe could exhaust jet-fuel stocks within six weeks.
US and Nigerian refiners then ramped up capacity, and by late July jet-fuel inventories had recovered to relatively comfortable levels.
Simpson said refiners then pivoted to diesel "perhaps a little too soon" — the moment jet fuel stopped looking tight, they over-rotated into diesel, and jet-fuel prices climbed again.
What do the European heatwave and flight cuts signal?
Persistent high temperatures across Europe have extended the summer flying season, adding to seasonal jet-fuel demand.
Airlines have restarted flight-cut programs, extending capacity reductions through year-end; fares on some routes have risen accordingly.
This reflects carriers actively shrinking supply to manage fuel costs. Whether Thanksgiving and Christmas fares climb further depends on whether jet-fuel supply can be replenished before then.
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