Airfares could DOUBLE as Iran crisis sends fuel costs soaring

But problems for air travellers are just weeks away.

The Gulf is a major source of aviation fuel, most of which is usually shipped through the Strait of Hormuz.

The strait has in effect been closed since the conflict began. Jet fuel prices in Europe have nearly doubled since the war broke out last week and James Noel-Beswick, head of commodities at market intelligence firm Sparta Commodities, said we were weeks away from seeing price hikes and cancellations at airports.

Although many airlines use ‘hedging’ to secure supplies at fixed prices months in advance, a large enough deficit in the market would mean even they were exposed, he said.

This is because the Asian refineries that would ordinarily have stepped in would not have enough fuel themselves.

Mr Noel-Beswick said that some long-haul prices had quadrupled in east Asia, with warnings over cancellations. He said: “The same situation will start to happen in Europe. “We are talking weeks aways. In some ways Europe is more protected – we have our own refining base and our own crude.”

This only accounts for some of our fuel, he said, explaining: “We normally fill that deficit from east Asia. “We will try and source some from the US but they don’t have any excess of jet fuel and are probably trying to keep it themselves.

“I think we are not very far from flights being cancelled in Europe, or at least seeing prices escalating.

“It all depends on how long the conflict goes on for. But jet fuel prices have doubled over the last week to ten days.

“A doubling of European airline prices, I think, is very feasible. But there’s no real limit.”

Mr Noel-Beswick said it was the most severe energy shock since the 1970s, and warned that even if the conflict ended tomorrow there would be a delay before normal service resumed.

He said: “It’s not like flicking on a switch.

“It will take more like months than weeks to get back to normal.”

The crisis has already fed throw to the forecourts, with petrol prices already up 5 pence per litre.

The AA’s Edmund King said there were likely to be continued “gradual increases” and advised drivers to think about whether journeys were necessary.

He said: “Our suggestion is that drivers should not change their refuelling habits but can consider cutting out some non-essential journeys and changing their driving style to conserve fuel.”

Simon Williams, head of policy at the RAC, said: “Unleaded is almost certainly going to reach an average of 140p in the next week or so, while diesel looks highly likely to climb to at least 160p a litre.”

As prices climb, Chancellor Rachel Reeves has come under pressure to keep a five pence cut in fuel duty in place. The cut, intended as a temporary measure, was introduced in 2022 to shield motorists against price shocks from the war in Ukraine.

The Chancellor extended it in last November’s budget but it was due to be unwound in stages from September.

Andy Meyer, Energy Analyst at thinktank the Institute of Economic Affairs, said that relaxing duty was an obvious way to alleviate the pressures on consumers.

He said: “If fuel prices start to impact people’s ability to get to work and to impact white van man then you can do something about that by cutting the duty.

“The Treasury can take the hit far better than ordinary working people.”

James Mills, Head of Trade Policy at trade association Logistics UK, said international cooperation was needed to avoid disruption to supply chains. He warned that if the situation continued, it could lead to higher prices across the board.

He said: “Higher energy prices and freight costs feed through supply chains into the price of goods and if volatility persists, these pressures can contribute to higher consumer prices.

“International cooperation is now essential to maintain safe navigation and stability in key maritime trade routes, and governments need to work with industry to manage risk and minimise disruption to global supply chains.”