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REUTERS Airlines are grappling with soaring jet fuel prices as the U.S.-Israeli war on Iran has caused a supply shortage – leaving consumers facing surcharges and airlines struggling to manage volatile costs as the fuel gets scarcer. Africa is among the most e
REUTERS
Airlines are grappling with soaring jet fuel prices as the U.S.-Israeli war on Iran has caused a supply shortage – leaving consumers facing surcharges and airlines struggling to manage volatile costs as the fuel gets scarcer.
Africa is among the most exposed regions to both supply disruptions and higher prices. Around 70% of jet fuel and kerosene imports to the continent flow via the Strait of Hormuz, according to financial and commodities analytics firm S&P Global.
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Since the conflict began in late February, shipping of fuel from refineries in the Middle East through the Strait of Hormuz has almost ground to a halt, removing roughly a fifth of global oil and liquefied natural gas supplies from the market.
‘BY THE TIME YOU GET THERE THE PRICE HAS CHANGED’
“You fly to airports across Southern, West and East Africa and you negotiate prices on arrival,” Jannie de Klerk, executive director of flight operations at South Africa’s National Airways Corporation, a charter business which also includes air ambulance services, told Reuters.
“By the time you get there, the price has changed. If the war continues, availability will become a problem. The instability of (jet fuel) prices makes it very challenging to move around.”
De Klerk cited a recent return flight from Lanseria to Cape Town via St Helena to collect a medical emergency patient, where jet fuel prices jumped by six rand ($0.355) a litre to R24/litre within 10 hours between the outbound and return legs.
“We now have to be very careful of how far ahead you quote for jobs otherwise you can quote short and lose money instead of making money,” he said.
Jet fuel prices in north‑west Europe have surged to record highs near $239 a barrel since the conflict began, according to LSEG data. Asian jet fuel prices are approaching $200 a barrel, close to recent records.
Jet fuel prices in the key hubs of Europe and Singapore
African carriers feel those increases more acutely than most. Jet fuel typically accounts for between 30% to more than 40% of operating costs, compared with a global average of 20% to 25%, according to the African Airlines Association.
South African low‑cost carrier FlySafair said in a statement jet fuel usually makes up 50% to 55% of its direct operating costs. The company does not hedge its fuel purchases. At current prices, it estimates an additional cost of about R35,000 per flight hour ($2,071) for each of its 37 Boeing 737‑800 in operation, which can do up to 165 flights a day. The airline said coastal airports in South Africa saw jet fuel prices rise by 70% in a single week.
Prices may continue to rise in tandem with crude oil. Benchmark Brent futures settled at $112.19 a barrel Friday, highest since the summer of 2022, in the wake of Russia’s invasion of Ukraine.
SHRINKING BUFFERS
The price shock comes as physical stocks across Africa are thinning.
The Board of Airline Representatives of South Africa said domestic jet fuel stocks are sufficient for about three to four weeks. Kenya had around 50 days of jet fuel stocks as of March 10. The Zambian government said the country has 10 days of jet fuel stocks, warning against panic buying and hoarding by industry players.
Airlink Chief Executive de Villiers Engelbrecht said the airline has enough fuel for the remainder of March and April, but uncertainty grows beyond that.
“Shock price adjustments tend to be more immediate, while stock shortages are more predictable and, in theory, easier to manage,” Engelbrecht said.
Airlines have begun taking defensive measures. FlySafair and other carriers globally have introduced temporary fuel surcharges, with FlySafair’s ranging between 101 to 367 rand according to its website. NAC has added clauses to contracts allowing it to pass on fuel surcharges if prices change en route.
Airlink will not impose a levy on existing ticket holders but will continue to adjust fares. If necessary, it will also consider cutting the capacity of flights to reduce direct variable costs, Engelbrecht said.
Consultancy CITAC has warned that East and Southern African countries such as Kenya, Madagascar and South Africa are among those most exposed to jet fuel shortages because they rely heavily on imported refined products.
Africa’s limited refining capacity compounds the problem. The continent’s refineries are small compared with plants in Asia and Europe and often struggle to meet domestic demand.
In South Africa, only two crude oil refineries – Sasol’s Natref and Glencore’s Astron Energy – are operating after the closure of two larger plants in 2020 and 2022.