The war in the Middle East has caused a 50% jump in the price of Texas crude since late February, when the United States and Israel attacked Iran and the latter blocked the Strait of Hormuz, through which a fifth of the world’s oil passes. This conflict poses a huge challenge for U.S. airlines, where fuel accounts for about 20% of their operating costs.
On Tuesday, March 31, jet fuel was trading at $4.64 per gallon, almost double the $2.50 prior to the attacks, according to Airlines for America. In the Dominican Republic, this phenomenon indirectly impacts travelers and businesses dependent on international flights, raising fares and complicating key routes.
Vulnerability of Low Cost Airlines
Low-cost airlines suffer first due to narrow margins and tickets sold in advance. Moody’s warns that firms like JetBlue, Spirit, and Frontier, already in the red last year, face higher risk. On Wall Street, Southwest Airlines fell 22.4% in the last month, JetBlue 17.6%, and Frontier 15.2%. Even giants like American Airlines dropped 14.8% and United 10.1%.
Global Impact of the War in the Middle East
In Asia and Europe, the war in the Middle East is causing cancellations, such as those by Volotea in Spain for the summer. Historically, blockades in Hormuz have spiked prices in past crises, such as in 2019 with US-Iran tensions. Pentagon experts report 13 U.S. service members killed and 365 wounded in the conflict.
Opportunity for Industry Giants
Delta Air Lines is holding strong with a 3.4% rise in the stock market, driven by record sales. Its CEO anticipates revenue growth in 2026 despite expensive fuel. United Airlines, on the other hand, anticipates acquisitions of assets from weakened competitors. American Airlines is dealing with $25 billion in debt, which complicates its position.
- Fuel prices: +50% Texas crude.
- Affected airlines: Low cost lead stock market declines.
- Beneficiaries: Delta and United seek market share.
The war in the Middle East accelerates restructurings, with potential mergers where the strong absorb the weak. In the Dominican Republic, the hike impacts remittances and tourism, recalling global energy vulnerabilities. Moody’s estimates growing pressures if the conflict persists, altering air routes for months.
