Air freight is facing cost pressure as jet fuel prices increase following the disruption linked to the Middle East conflict. Rising refined fuel costs are affecting airlines and cargo operators, with potential implications for the movement of goods and passengers.
Jet fuel prices have increased as supply chains adjust. According to the International Air Transport Association, the global average jet fuel price rose 11.2% week-on-week to US$175.00 per barrel.
"Everyone focuses on oil," said CommBank Head of Commodities and Sustainable Economics Vivek Dhar. "But at the end of the day, what businesses and consumers actually use is the fuel that is refined from oil."
"In particular, jet fuel prices have jumped significantly," Dhar said. "Buyers are competing more aggressively for that, which is pushing up global prices."
Australia produces some aviation fuel domestically but remains reliant on imports. Department of Energy data for December 2025 shows local refinery production at around 1.4 billion liters, compared with approximately 8.1 billion liters imported. China, Singapore, and South Korea are among the main suppliers.
In March, exports of refined fuels from China were reported to have slowed for cargoes that had not cleared customs, adding to supply uncertainty.
"Flights are going to be more expensive - that's probably the base expectation for as long as this crisis lasts," Dhar said.
Air freight is also affected by these developments. According to the Bureau of Infrastructure and Transport Research Economics, international air freight accounts for less than 1 per cent of Australia's merchandise trade by volume but around 21 per cent by value.
"If airlines can't secure fuel for cargo operations, we could start to see disruptions and cancellations that impact the availability of certain goods," Dhar said.
The adjustment in fuel supply is expected to continue over the coming months as supply chains respond to the disruption.
"We expect jet fuel prices to remain elevated while this disruption continues," Dhar said.
Source: Newsroom
