How could Brent crude remaining above $100 per barrel—driven by Middle East tensions—along with jet fuel reaching $4.04 per gallon, up 62% since the Iran conflict began and equivalent to roughly $170 per barrel as refinery crack spreads nearly tripled, affect airline costs and ai

If Brent remains above $100 and jet fuel stays near $4.04 a gallon, airlines’ fuel costs will rise sharply—especially for carriers without extensive hedges—and the likely response is a mix of higher fares, capacity cuts, and weaker margins. The effect would probably intensify into 2027 because hedges expire, while a continuing conflict could lift prices further through both crude and refinery “crack” spreads.

• Jet fuel at $4.04 per gallon was 62% above its level at the start of the Iran conflict and above the $3.15–$3.80 range U.S. airlines had expected for the third quarter. This raises costs more than crude alone implies because refinery margins have also widened. 5

• Ryanair’s Michael O’Leary said that, if oil remains high into 2027, airfares should see a “significant uplift.” He described pricing for the December-to-March period as highly uncertain, even while expecting fares in the July–September quarter to be very modestly lower year on year. 12

• Ryanair has some temporary protection: it hedged 80% of its 2027 fuel requirement at $67 per barrel. But it nevertheless reduced its traffic target to 214 million from 216 million passengers, citing exposure to expensive unhedged winter fuel; less-hedged rivals are more vulnerable and could cut capacity or, in severe cases, fail. 101415

• In the U.S., airlines can initially absorb part of the increase rather than fully pass it on. Airlines for America CEO Chris Sununu said carriers were “eating” some of the fuel cost and did not expect a major immediate fare jump. That is a short-run cushion, not a guarantee: sustained spot-fuel prices above planning assumptions erode margins and strengthen the case for later price increases. 67

• Available pricing data already point upward: Hopper data cited in industry reporting put the average U.S. domestic fall airfare at $326, up 39% year over year. 16 Tight capacity also means fares need not fall quickly even if oil eases, because airlines can preserve pricing rather than immediately return fuel savings to passengers. 4

• Gulf-market fares may also remain elevated despite any temporary fuel retreat, according to industry analysts, because demand, constrained capacity and high operating costs can keep ticket prices firm. 9

• Holiday travel is the key restraint on pass-through. If high prices and geopolitical concern reduce discretionary travel, airlines may be unable to recover every fuel dollar through fares; they would then face a trade-off among lower margins, fewer flights, and selectively higher peak-date prices. Ryanair’s uncertain winter outlook reflects that tension. 112

• The main 2027 risk is delayed rather than one-off fare inflation. Existing fuel hedges can soften the near-term shock, but as they roll off, airlines must buy more fuel at prevailing prices. If Middle East disruption persists—or refinery bottlenecks keep jet-fuel crack spreads elevated—fare increases could become materially larger, particularly on peak holiday, long-haul and capacity-constrained routes. 1415