Chevron CEO Expects Air Travel To ‘Get Worse’ Over The Next Few Weeks As Hormuz Crisis Pushes Fuel Costs Higher

Amid the ongoing Iran war, Chevron (NYSE:CVX) CEO Mike Wirth has cautioned that air travel costs could surge, and flight availability may dwindle.

Wirth, on Thursday, expressed that the conflict over the Strait of Hormuz is causing instability in global markets, leading to a rise in fuel prices. “We’ve seen some upward pressure on gasoline prices now. I think aviation is clearly an area where it’s going to probably get worse over the next few weeks,” he said on CBS’s Face the Nation with Margaret Brennan.

He also pointed out that the jet fuel market in Europe and Asia is tightening rapidly, compelling airlines to modify their flight schedules and hike fares.  “We’re seeing it flow through into fares. I think that’s one of the first places it will be felt most broadly,” Wirth noted.

“And yes, fares — fares could be higher,” he said. 

Wirth highlighted that a jet fuel shortage was already in effect in certain regions before the Iran war commenced on Feb. 28. In response, airlines have increased bag check fees and cut down routes. He noted that U.S. airlines are somewhat better positioned than European peers because the U.S. produces its own jet fuel.

As per AAA, the average gasoline price in the U.S. is $4.059 per gallon.

Hormuz Crisis Hits Airline Profits

Wirth’s comments come in the wake of the International Energy Agency (IEA) Chief calling the Hormuz crisis the “biggest energy security threat in history.” With the world losing 13 million barrels per day of oil supply, it surpasses the disruption caused by the 1973 and 1979 oil crises combined.

North American jet fuel prices have jumped over 80% year-on-year, according to the International Air Transport Association (IATA). Rising oil prices are squeezing airline profitability, forcing carriers to rethink per-seat revenue strategies, while uneven demand persists as cost-sensitive travelers pull back and premium customers continue spending.

A March report by the Wall Street Journal stated that Delta Air Lines, Inc (NYSE:DAL), United Airlines Holdings, Inc. (NASDAQ:UAL) were rapidly expanding premium seating, with business and first-class growth far outpacing economy since 2020, while Southwest Airlines Co. (NYSE:LUV) added extra-legroom options and fare tiers to boost revenue.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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