Oil prices have soared to their highest since 2008 as supplies lag recovering global demand and as the U.S. weighs banning Russian oil imports following Moscow's invasion of Ukraine.
Global crude oil benchmark Brent has jumped 26% to more than $120 a barrel since Russian forces invaded Ukraine on Feb. 24, triggering a global scramble by importers to secure alternatives to Russian crudes that are at risk of sanctions.
The race for crude has jacked up prices for refined products that will be affected if crude supplies tighten, with Singapore jet fuel prices outperforming Brent since Feb. 24 to gain nearly 35% and hit $150 a barrel for the first time since July 2008.
Jet fuel prices in Europe and the United States have posted similar gains, leaving global carriers who have already been hammered by COVID-19 over the last two years having to pass on higher costs via fuel surcharges and increased fares.
In turn, fare hikes risk undermining an air travel recovery that has gained momentum as international border curbs ease.
"Travelling (by air) is not going to be cheap from now onwards. With the inflation across countries, most people have shallower pockets, less disposable income," a Singapore-based jet fuel trader said.
She said more travellers would limit their plans to "necessary" travel and said restrictions related to the pandemic - with many places still requiring negative COVID tests - added to uncertainties for those travelling.
Global airline capacity dipped 0.1% this week to 82 million seats, and remains 23% below the corresponding week in pre-pandemic 2019, according to aviation data firm OAG.
Total scheduled airline capacity in North East Asia in the week to Monday dropped 4.5% from the previous week, more than any other region, while international capacity to and from the region remains 88% below the corresponding week in 2019.
Domestic flight schedules in the United States had been on track to surpass 2019's levels this spring, but the higher fuel and ticket costs now risk slowing that momentum.
"Airlines will be pushed again on credit limits and again see suppliers less willing to give unsecured terms. We may see some further casualties post-COVID now, just when recovery looked more positive," a senior London-based trade source said.
Buoyed by expectations for tighter near term supplies, Asian refining margins for jet fuel on Monday jumped to $26.17 a barrel over Dubai crude, their strongest level on record according to Refinitiv Eikon data that goes back to 2009.
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Basically what all the politicians were Laughing about is now sitting right on there Lap and it's very unpleasant and will be very expensive now we also will be seeing this affect Tourism rental cars crazy expensive hotels empty but expensive flights crazy expensive , food crazy expensive even for the well off . These are going to be Hard Times .
This issue will be one of the most significant economic factors for the tourism & travel industries world wide, all of a certain vintage will remember the fuel surcharges on package hols back in the 70’s & 80’s. The inflation rates all ready high will be boosted by this real oil shock announcement today of the USA,U.K. & best effort by European Union to cease Russian oil and gas by year end. As an old oil patch worker I say good Luck with that. And you will have to do business with some really unpleasant guys to obtain that objective. After 2 interesting years looks like this will be seriously challenging