Jet fuel prices have plunged amid expectations that exports from the Middle East will resume following a tentative US-Iran ceasefire deal, raising hopes of restored energy flows through the Strait of Hormuz. The reduction in prices comes as a relief to airlines grappling with sharply increased fuel costs.

In north-west Europe, the jet fuel benchmark dropped to as low as $957 per tonne this week, nearly halving from its April peak, according to market data. Singapore jet fuel prices also fell to their lowest level since the onset of the conflict in the region, while US Gulf Coast prices reached their lowest since early March.

The surge in jet fuel prices earlier this year was triggered by the closure of the Strait of Hormuz, a critical passage for oil and refined product shipments from Gulf producers. The disruption sparked concerns over potential flight cancellations during the busy holiday season as fuel supplies tightened. In response, the United States and Nigeria increased jet fuel exports to Europe and Asia, and refiners worldwide intensified production efforts.

Despite concerns, some major carriers, including British Airways and Air France, have announced sufficient fuel reserves to cover their entire summer schedules. Nonetheless, the global airline industry anticipates a rise in fuel expenses by approximately $100 billion this year.

Market participants suggest that a resurgence of Middle Eastern exports could temporarily create an oversupply, since some airlines have already scaled back flights and refineries have raised output levels. A senior jet fuel manager noted that cargoes previously stranded due to the conflict are expected to be released within about 30 days. Meanwhile, increased US exports and higher refinery output ensure abundant jet fuel availability in the near term.

Although prices have declined sharply, jet fuel in Europe remains roughly 17 percent more expensive than before the conflict began. This follows warnings by the International Energy Agency (IEA) in April that Europe’s jet fuel reserves might last only another six weeks.

Prior to the recent price drop, airline executives cautioned that sustained high fuel costs could lead to deeper flight reductions and job cuts during the coming winter. The surge in prices had incentivized refiners to maximize production, especially in the United States, where crude oil inventories recently fell to their lowest level since 1985 due to increased refinery runs.

The IEA estimates that about 60 percent of the jet fuel supply lost from the Middle East to Europe has been offset by increased output from the US and Nigeria, highlighting a partial mitigation of the disruption’s impact on global fuel markets.