Middle East tensions send oil prices soaring, raising prospect of another rise in October air surcharges

A renewed escalation in tensions between the United States and Iran has sent international oil prices sharply higher, putting South Korea’s airlines on alert for another increase in fuel surcharges in October.

Brent crude for November delivery closed at $94.65 a barrel on the ICE Futures Exchange in London, up 4.6% from the previous session. U.S. West Texas Intermediate for October delivery ended at $90.22 a barrel on the New York Mercantile Exchange, a 5.2% increase.

The rise follows renewed military tension and continued attacks involving the United States and Iran. The possibility of supply disruptions through the Strait of Hormuz, a key route for oil shipments, has added uncertainty to the crude market. Airlines are watching closely because changes in international oil prices feed directly into jet-fuel costs.

International-flight fuel surcharges had fallen for three consecutive months through August after reaching a high in May. They turned upward again as conflict in the Middle East intensified. Korean Air and Asiana Airlines applied level 21 this month under the 33-level surcharge system, up from level 14 in the previous month.

The surcharge is calculated each month using average Singapore jet-fuel prices from the 16th day of the month before last through the 15th of the previous month. Industry expectations favor another increase in October if the current oil-price strength continues and reaches aviation fuel. One industry official said, “Because international oil and jet-fuel prices are highly volatile, it is necessary to watch how they develop. If the current price strength continues, it could affect airlines’ cost burdens and fuel surcharges.”

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Because international oil and jet-fuel prices are highly volatile, it is necessary to watch how they develop. If the current price strength continues, it could affect airlines’ cost burdens and fuel surcharges.