![\"Airfares](\"https:\/\/static.toiimg.com\/thumb\/msid-131963751,imgsize-210141,width-400,height-225,resizemode-4\/jet-fuel-supply-crunch.jpg\" "\\"Airfares")
<\/div>\n<\/div>\n<\/div>\nGeopolitical disruptions and refinery constraints are tightening global jet fuel supplies, increasing costs for airlines and potentially leading to higher airfares, according to a McKinsey report.The report said jet fuel demand is expected to rise ahead of the summer travel season at a time when inventories remain depleted and supply chains continue to face pressure.While fuel prices have risen largely in line with crude oil trends, supply has also been constrained by reduced refinery production from major jet fuel exporters in the Gulf region and Asia, which together account for about 40 per cent of global jet fuel supply.<\/p>\n McKinsey noted that supply pressures are reflected in the jet fuel “crack spread”, the difference between the price of crude oil and refined fuel products.Historically, jet fuel crack spreads have generally remained around $20 per barrel or lower. However, the consultancy said the average crack spread in 2026 could exceed $50 per barrel.\u201cIn recent history, the jet fuel crack spread has tended to linger around $20 per barrel or less, but in 2026, it could end up averaging more than $50 per barrel,\u201d the report said, according to news agency ANI.The report added that higher refining margins have encouraged refiners to increase jet fuel production, partially easing supply concerns.<\/p>\n McKinsey said a rise in tanker traffic through the Strait of Hormuz could help reduce immediate pressure on fuel prices. However, it warned that jet fuel prices and crack spreads are likely to remain volatile as inventories are rebuilt and supply chains normalise.According to the report, countries including China, India and South Korea have moved to at least partially restrict fuel exports following recent geopolitical tensions, limiting the ability of Asian markets to fill supply gaps.The consultancy also noted that many global refineries were already operating at high utilisation rates before the conflict began, leaving little spare capacity to significantly boost output.\u201cExisting inventories have been doing heavy lifting to bridge the supply gap,\u201d the report said.<\/p>\n McKinsey expects jet fuel prices to remain elevated for several months even if shipping activity through the Strait of Hormuz returns to normal levels, as countries may seek to replenish inventories and expand strategic reserves.The report highlighted the potential impact on airline ticket prices, noting that fuel typically accounts for around 30 per cent of an airline’s operating costs.\u201cGiven that about 30 percent of the price of an airline ticket typically goes toward fuel costs, a doubling of fuel costs (with most passed through) could lead to fare increases of roughly 20 to 25 percent,\u201d the report said,<\/div>\nCrack spreads surge as supply tightens<\/b><\/h3>\n<\/p>\n
Higher fuel costs could hit passengers<\/b><\/h3>\n<\/p>\n