Ryan Kirby, junior partner, and Joseph Lakaj, analyst, at Alderman & Company, say the outcome will depend on whether the conflict is short-;oved or prolonged
As of the writing of this article, the US war with Iran is starting to impact global aviation supply chains.
According to the International Energy Agency, the war in the Middle East is creating the largest supply disruption in the history of the modern global oil market.
Before the start of the war, there were around 20 million barrels per day of crude and oil products flowing through the Strait of Hormuz.
As of today, the US Navy is reported to have stopped all traffic. With this steep drop off, countries have been working to offset the current supply shortfall.
Still, the damage is ongoing and is directly impacting the supply chains for commercial aviation (not just limited to jet fuel but also lubricants and other materials that are used in the manufacture and maintenance of commercial aircraft.
In the past few days, Middle Eastern countries have worked to offset the shortfall, with Saudi Arabia diverting 3.6 million barrels and another 3.7 million barrels coming from stockpile releases or crude diversions from other nations, but this still leaves an 11.1 million barrels per day supply gap.
This gap is showing up in both gasoline and jet fuel prices. In the US, average gasoline prices have surged roughly 30% since the war started, held down in part because of US domestic crude supply.
Jet fuel, one of the airlines’ largest costs, has risen more than 85% to a global average of nearly $5 per gallon (up from $2.50 per gallon before the war).
United Airlines chief executive Scott Kirby told ABC News in late March that ticket prices would have to rise 20% for the airline to cover the higher fuel costs. United followed with a cut of 5% of routes.
Low-cost carriers, including JetBlue or Frontier, are probably the most vulnerable due to their customers being the most price sensitive, and customers potentially opting for ground transportation or simply forgoing the trip.
While this may be bad news for airlines, it may be good news for Airbus and Boeing. If the net long-term result is slightly higher fuel prices and the airlines simply gain greater sensitivity to the possibility of future spikes, then airlines may increase their orders for new aircraft.
This is because a rise in fuel costs makes it easier to decide to purchase new aircraft versus continuing to fly older models.
If airlines believe high fuel prices are here to stay for a while, many will seek to dispose of older, less efficient aircraft and get in line to take delivery of newer, more fuel-efficient models.
The ripple effect of this disruption may also reshape the commercial aviation middle market M&A landscape.
At the beginning of the year, this market was positioned for an active year, with strong defence spending and rising commercial aircraft demand driving high multiples and competitive deal flow.
This war has introduced a new layer of complexity that is shifting activity. Depending on the length and duration of the shock to the oil market, we might see one of two distinct outcomes.
If the shock is short-lived, the outcome we expect would be a modest increase in backlog at Airbus and Boeing, as airlines refocus their fleet plans to include more fuel-efficient aircraft over the long term.
If the shock to the oil market is longer and deeper, then we could expect the airlines to be forced to raise prices, which would reduce demand, which would put downward pressure on aftermarket suppliers and would slow the pace of new orders for Boeing and Airbus. Soon enough, we will know which of these outcomes is most likely.
Sources:
https://www.iea.org/reports/oil-market-report-march-2026
https://thesoufancenter.org/intelbrief-2026-march-25/
https://www.bloomberg.com/graphics/2026-iran-war-hormuz-closure-oil-shock
The post City Insider: The new layer of complexity the war on Iran has introduced to aviation appeared first on Aviation Business News.
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