Why Flight Prices Keep Rising: Jet Fuel Market Explained

Every time you book a flight, roughly one-quarter of the airline's operating cost comes from a single commodity: jet fuel, officially known as kerosene or Jet A-1. Unlike the crude oil that powers cars and ships, aviation fuel is a specialist product with tighter specifications, fewer refineries capable of producing it, and a global supply system so concentrated that disruptions anywhere on Earth reshape ticket prices everywhere.

Why aviation fuel is different from other oil products

Jet fuel must perform at temperatures that drop to minus 60 degrees Celsius at cruising altitude. It must burn cleanly, resist freezing, and maintain exact viscosity standards. Only a fraction of the world's oil refineries are equipped to produce it to specification. This narrow production base means that regional shortages cannot be easily substituted with supply from other producers; airlines cannot simply switch to cheaper fuel from an alternative source. The global aviation fleet burns roughly 100 million tonnes of jet fuel annually across every continent, yet the supply chain remains highly concentrated geographically. The United States, Singapore, the Netherlands, and South Korea together account for a large share of global Jet A-1 production and trading, meaning decisions in these regions cascade outward.

How prices are set and traded globally

Jet fuel prices are benchmarked primarily against two reference points: the Platts price, published daily from London, and similar indices published in Singapore for the Asia-Pacific region. Airlines, fuel suppliers, and trading firms use these prices to hedge against volatility and lock in forward contracts months or years ahead. A significant share of this trading happens on the Intercontinental Exchange in London, where financial contracts tied to jet fuel change hands constantly. When crude oil prices spike due to geopolitical tension, refinery closures, or demand shocks, jet fuel prices follow within days. Because airlines typically hedge only a portion of their fuel exposure, unexpected price movements directly hit their cost base and, in turn, ticket prices.

Airlines in different regions experience price impacts differently depending on their hedging strategies, their contracts with fuel suppliers, and their exposure to currency fluctuations. A carrier based in a country with a depreciating currency faces higher fuel costs even if global prices remain flat. This creates persistent price differences on identical routes flown by competitors from different home bases.

The chokepoints that reshape the market

Refinery outages, political decisions, and supply route disruptions all ripple globally. The Suez Canal, through which roughly 12 percent of global trade flows, becomes critical when refineries in Europe and the Middle East serve Asia-Pacific airlines. A blockage or military action in that waterway forces fuel shipments to take longer routes, raising transport costs and delivery times. Similarly, sanctions or political instability affecting major refining hubs-such as the Middle East, Russia, or Venezuela-reduce global supply and lift prices internationally. The Russian invasion of Ukraine in 2022 disrupted aviation fuel supplies across Europe and elevated prices globally within weeks, even for airlines thousands of miles from the conflict zone.

Weather also matters. Hurricanes in the Gulf of Mexico, where significant US refining capacity sits, can shut down production temporarily. Monsoons affecting Singapore's refinery operations disrupt supply across Asia. These are not theoretical risks; they occur regularly and create price spikes that persist for weeks or months until supply chains rebalance.

Why this matters globally

Aviation fuel costs directly affect ticket prices, cargo rates, and airline profitability in every country. Regions with higher fuel costs face higher ticket prices for passengers and higher shipping costs for goods. Airlines in developing economies, which often cannot negotiate as favourable fuel supply contracts as legacy carriers in wealthy nations, face disproportionate cost burdens. Low-cost carriers, which operate on thin margins, are particularly vulnerable to fuel price spikes. When jet fuel costs rise sharply, some airlines reduce routes to unprofitable regions, affecting connectivity in Africa, South Asia, and the Pacific. This suppresses tourism, constrains business travel, and raises import costs for goods that rely on air cargo.

The global transition to sustainable aviation fuels, mandated by regulations in the European Union, the United States, and other jurisdictions, is beginning to reshape this market. As airlines blend conventional jet fuel with renewable alternatives, demand for conventional kerosene will fall, but in the transition, dual supply chains and higher blended costs could actually increase fuel expenses for several years. Understanding these shifts matters for anyone traveling or shipping goods internationally.

The bottom line

Jet fuel is one of the most globalised commodities on Earth, traded on exchanges in London and Singapore and consumed simultaneously across six continents. Its price is set by crude oil markets, geopolitical risk, refinery capacity, and shipping routes that few passengers ever think about. A refinery closure in Europe, a blockade in the Middle East, or a hurricane in the Gulf of Mexico ultimately determines whether your ticket costs more or less. Because so few countries produce aviation fuel, and because airlines cannot easily substitute it, the supply chain remains fragile. Recognising this hidden architecture explains why your flights cost what they do and why global shocks always find their way to the price of your ticket.