Willie Walsh, head of the International Air Transport Association, said it could take months for jet fuel supplies to stabilize even if the Strait of Hormuz remains open, due to damage and disruption to refining capacity across the Middle East.

Airlines are facing what executives describe as their most severe operational strain in years, as Iran’s earlier closure of the key shipping route choked global jet fuel supply, pushing prices sharply higher.

Although oil prices fell below $100 a barrel following the ceasefire announcement, jet fuel costs remain elevated.Delta Air Lines said it expects lower-than-forecast second-quarter profit and plans to reduce capacity across its network to offset an estimated $2 billion increase in fuel expenses.

The carrier projects jet fuel prices at around $4.30 per gallon for the June quarter, significantly higher than a year earlier.Fuel typically accounts for about 27% of airline operating costs, making the recent surge particularly burdensome.

Industry data indicates jet fuel prices have more than doubled since the onset of the Iran conflict, outpacing increases in crude oil.Airlines globally have responded by raising fares, cutting flights, carrying additional fuel from origin airports and adding refueling stops to manage supply uncertainty.

Walsh said that while crude prices may ease, jet fuel is likely to remain relatively expensive in the near term due to refinery constraints. “Even if it reopens and stays open, it will take months to restore supply to required levels,” he said.The disruption is also affecting adjacent sectors.

TUI said it is assessing options for two cruise ships stranded in Abu Dhabi and Doha since the conflict began, noting it could take weeks to resume operations.Analysts said the ceasefire has supported airline stocks, with some describing the situation as a potential buying opportunity.

However, broader recovery in travel demand may lag, with economists pointing to a prolonged impact on consumer confidence.

According to Oxford Economics, it could take several months for traveler sentiment to normalize, even under a stable ceasefire scenario, as safety perceptions recover gradually.

The Middle East tourism sector, valued at roughly $367 billion, is also expected to face a delayed rebound, reflecting the wider economic fallout from the conflict and supply chain disruptions.

“At this point, we take a cautious approach, and we are not making any changes to specific services,” the Danish container group said in a statement to Reuters.

The conflict, which escalated following U.S.-Israeli strikes on Iran in February and subsequent Iranian retaliation, led to the closure of the Strait of Hormuz and brought Gulf shipping activity close to a standstill, disrupting global supply chains.

Maersk, one of the world’s largest container shipping companies, had suspended cargo bookings to several Gulf ports last month and introduced emergency bunker fuel surcharges globally to offset rising fuel costs.

“The ceasefire may create transit opportunities, but it does not yet provide full maritime certainty and we need to understand all potential conditions attached,” the company said.It added that any decision to resume transit through the strait would depend on ongoing risk assessments, security conditions and guidance from relevant authorities and partners.

In response to disruptions, Maersk has implemented alternative logistics routes, including a “land-bridge” system using ports in Jeddah in Saudi Arabia, Salalah and Sohar in Oman, and Khor Fakkan in the United Arab Emirates, allowing cargo to be transported by land into Gulf destinations.

The company said it would continue to monitor developments closely and update operations as greater clarity emerges in the coming days.

Tokyo — Business sentiment among Japanese firms improved in the three months to March while corporate inflation expectations rose to record levels, a closely watched survey showed on Wednesday, strengthening the case for a near-term interest rate hike by the Bank of Japan, even as escalating fuel costs linked to the Iran conflict darken the economic outlook.

The central bank’s quarterly “tankan” survey indicated that large manufacturers’ sentiment index rose to +17 in March, slightly above market forecasts of +16 and up from +16 in December, marking its highest level since December 2021.

The improvement extended a fourth consecutive quarter of gains, suggesting that parts of Japan’s industrial sector have continued to recover despite mounting global uncertainties.

Sentiment among large non-manufacturers remained robust, with the index holding steady at +36, surpassing a median market forecast of +33. The strength in the services sector was supported by rising profits from price increases and a continued recovery in inbound tourism, according to the survey data.

A Bank of Japan official said resilient demand for artificial intelligence-related semiconductors and easing uncertainty over U.S. trade policy helped offset pressures from higher input costs and geopolitical tensions in the Middle East.

At the same time, the survey highlighted growing inflationary pressures within the corporate sector. Companies reported rising expectations for future price increases, reflecting the impact of higher fuel and raw material costs.

Analysts said this trend could provide additional justification for the central bank to move toward policy normalisation after years of ultra-loose monetary settings.Mari Iwashita, executive rates strategist at Nomura Securities, said the survey underscored mounting inflation risks driven by external shocks.

She noted that companies facing surging energy costs may increasingly pass those expenses on to consumers, reinforcing upward pressure on prices.The data comes at a critical juncture for the Bank of Japan, which is weighing whether to raise interest rates as early as this month.

Market participants have been closely monitoring the tankan survey as a key gauge of corporate sentiment and investment plans.Despite the relatively upbeat current conditions, the survey revealed growing caution among firms about the near-term outlook.

Both manufacturers and non-manufacturers expect business conditions to deteriorate over the next three months, reflecting concerns about the economic fallout from the Iran conflict and its impact on energy markets.

The ongoing conflict has driven up global fuel costs, increasing operational expenses for Japanese companies that rely heavily on imported energy. The resulting squeeze on margins is expected to weigh on profitability, particularly for industries with limited pricing power.

Marcel Thieliant, head of Asia-Pacific at Capital Economics, said the strength of the survey could still encourage policymakers to act. He noted that firms appeared to be absorbing the energy shock for now, suggesting that underlying economic conditions remain stable enough to support a rate hike in the near term.

Capital expenditure plans among large firms also pointed to cautious optimism. Companies expect to increase investment by 3.3% in the fiscal year 2026, exceeding a median market forecast of a 3.0% rise.

The planned increase suggests that firms are continuing to invest in growth despite heightened uncertainty.The survey period, which ran from February 26 to March 31, captured responses from roughly 70% of firms by March 12, shortly after the escalation of hostilities involving the U.S.-Israel attacks on Iran on February 28.

This timing indicates that early assessments of the conflict’s economic impact are already being reflected in corporate sentiment.Economists cautioned that the positive momentum seen in the survey may not be sustained if external conditions worsen.

Stefan Angrick said that while a weak yen and subdued wage growth have supported corporate margins, broader economic challenges remain.He noted that export growth could weaken amid slowing global demand, while domestic consumption may remain constrained by modest income gains.

Over time, these factors could weigh on corporate profits and sentiment, complicating the central bank’s policy decisions.The survey underscores the delicate balance facing policymakers as they navigate between emerging inflationary pressures and risks to economic growth.

While improving sentiment and rising prices strengthen the case for tightening monetary policy, the uncertain global environment, particularly developments in the Middle East, continues to pose significant challenges for Japan’s export-driven economy.

The planned aid comes as households face mounting pressure from higher fuel and electricity prices driven by geopolitical tensions affecting global energy markets.

Earlier this month, the government introduced a three-month cap on profit margins for fuel retailers and a range of supermarket goods in an effort to curb profiteering and contain inflationary pressures.

The measures target both energy-linked products and essential consumer items, reflecting concerns that supply disruptions tied to the conflict could feed through into broader price increases.

Greece, like many energy-importing economies, remains exposed to volatility in international fuel markets.

The government’s intervention signals an effort to balance market stability with consumer protection as the conflict’s economic impact deepens.Further details of the aid package were not immediately disclosed.