Jet fuel markets are once again under strain globally, with airlines facing renewed cost pressures as refining margins surge and price volatility intensifies across key trading hubs. The International Air Transport Association (IATA) has warned that the impact is uneven across carriers, largely depending on their ability or inability to hedge fuel exposure.
The warning was raised by IATA’s Head of Fuel, Daniel Chereau, at the S&P Global Energy Middle East Petroleum and Gas Conference, where he noted that many airlines are “not in a position to hedge their exposure,” leaving them fully exposed to sharp swings in jet fuel prices and broader energy market shocks.
Jet fuel hedging refers to financial risk management tools such as futures, swaps, and options used by airlines to lock in fuel prices and stabilise operating costs. However, industry data shows that while carriers in advanced markets actively deploy these instruments, adoption remains limited in several developing aviation markets, including Nigeria.
In Nigeria, industry experts confirm that jet fuel hedging is not currently practised by airlines or marketers, a gap that continues to amplify cost instability. Speaking in an exclusive comment to Nairametrics, Raven Energy Managing Director, Adeyinka Adewole, noted that Nigerian operators remain fully exposed to global crude-linked pricing and foreign exchange volatility, unlike counterparts in more developed aviation markets.
He added that this structural gap has worsened the unpredictability of Jet A1 pricing in the country, especially during periods of global supply disruption. Recent months have already seen steep increases in aviation fuel costs, forcing airlines to raise fares, reduce routes, and in some cases suspend operations temporarily.
Industry data shows Jet A1 prices in Nigeria surged from about ₦900 per litre in February 2026 to over ₦3,000 per litre within weeks at the height of market pressure, triggering intervention from regulators and temporary relief measures. Although marketers have disputed the highest reported figures, the volatility has already left lasting pressure on airline balance sheets and passenger demand.
Globally, IATA also highlighted that refining margins for jet fuel—known as crack spreads—have hit record levels, further tightening cost conditions across the aviation sector. With demand disruptions already emerging in some regions, analysts warn that airlines without hedging buffers may continue to face unpredictable cost shocks in the months ahead.