On the heels of a two-week ceasefire in the Iran war—which requires reopening the Strait of Hormuz, a critical oil passageway—benchmark U.S. crude oil prices sank to $94.98 a barrel on April 8, down 16%. That’s left many Americans wondering when fuel prices—and therefore airline ticket prices—might come down.
The answer: probably not anytime soon.
First, let’s take a look at gas prices. On Wednesday, the day after the ceasefire was announced, gas prices went up 2 cents, not down, hitting an average of $4.16 a gallon nationwide.
Why aren’t we seeing prices fall? There are a few reasons. For one, reopening the Strait of Hormuz is only the first of perhaps many steps needed to getting oil flowing out of the Middle East, which could take days or weeks, according to regional oil executives who spoke with The New York Times. They noted a full recovery could take months.
Then, there is the issue of damage to the region’s oil and gas infrastructure from U.S. and Israeli air strikes in Iran and Iran’s retaliatory strikes on the United Arab Emirates and a number of other oil-producing nations. That could also take time to repair.
Turning to the airline industry: The conflict has sent jet fuel prices skyrocketing, sticking airlines with unwanted added costs, according to The Washington Post. Jet fuel prices hit $195 a barrel at the end of March, up nearly $100 from the beginning of the war. Those prices aren’t expected to change anytime soon, and remain hovering at $4.81 a gallon, according to Airlines for America’s Argus U.S. Jet Fuel Index.
It begs the question: How are airlines dealing with those additional costs?
One way is through higher fares and reduced flights, which Delta Air Lines recently announced it is doing, despite reporting strong profits. Another way is by raising checked bag fees, which Southwest, United, JetBlue, and Delta have all done in recent weeks—with Delta raising its checked baggage fee by $10.
Finally: Expect more canceled flights or fewer scheduled flights overall, at least in the foreseeable future.