Airlines face a second fuel shock in 2026. Brent crude has settled above 108 dollars a barrel following the attack on Saudi Arabia’s East-West Pipeline, and the jet fuel market has almost no spare capacity left to absorb the disruption. For operators in and around the Red Sea region, the same campaign has also raised the direct operational risk to aircraft.

Why fuel is the first pressure point

According to the International Air Transport Association (IATA), fuel typically accounts for around 30 percent of total airline operating expenses. Sustained price increases therefore translate quickly into route cancellations, surcharges, and fare rises.

The effect was already visible earlier this year. Before hostilities began in February, jet fuel traded at a relatively stable baseline of around 85 to 90 dollars a barrel; by mid-April, it had surged past 150 to 200 dollars a barrel. KLM cut flights and cited rising kerosene costs directly, while easyJet projected a pretax loss of up to roughly 758 million dollars for the first half of its 2026 fiscal year, as reported by PBS NewsHour.

Earlier in 2026, International Energy Agency (IEA) director Fatih Birol told the Associated Press that Europe held roughly six weeks of remaining jet fuel supply. He described the situation as the global economy’s largest energy crisis.

A market with little buffer

The supply problem predates the current conflict. Since 2019, more than 1.2 million barrels per day of US refining capacity has closed permanently or been converted. As a result, the US Energy Information Administration (EIA) had already forecast that 2026 jet fuel supply would fall to just 21 days, the lowest level since 1963.

That structural tightness will remain even if the conflict ends. With minimal buffer in the system, the market has little capacity to absorb any further supply shock. The East-West Pipeline strike and renewed attacks near the Jizan refinery are exactly that kind of shock.

Reporting on shortages has varied. In June, some private aviation operators told Fortune they had seen no supply disruption at the airports they served, although they acknowledged higher prices. Through the summer, the picture was one of acute regional tightness and price volatility rather than a uniform global shortage. Developments in September point towards renewed strain.

The East-West Pipeline strike

In mid-September, a drone attack struck Saudi Arabia’s East-West Pipeline. It was carried out by an Iraqi Iranian-backed militant group (IBMG), reportedly with Yemeni Houthi support. The 1,200-kilometre pipeline allows the Kingdom to move crude to the Yanbu export terminal without transiting the Strait of Hormuz, a chokepoint that has been effectively closed for much of 2026 amid the wider Iran conflict.

Saudi authorities have described the closure only as a “precautionary measure” and have not given an official damage assessment or repair timeline. Independent estimates vary, with some analysts expecting disruption to last around a month. Aramco has separately told some customers it cannot guarantee deliveries through mid-November, and Reuters reports that Saudi Arabia has informed European customers that some September crude cargo deliveries are cancelled.

How markets have responded

CNBC reported that oil prices climbed more than 8 percent in September as the United States and Iran exchanged military strikes for the first time since July. That broadening of the conflict coincided with the Houthi campaign against Saudi energy facilities. After the pipeline attack, Brent rose close to 3 percent in a single session to settle above 108 dollars a barrel, taking gains for the month past 20 percent.

Goldman Sachs has said Brent could climb past 120 dollars a barrel in 2027 if Gulf crude output remains around four million barrels per day below prewar levels. The bank cited intensified shipping attacks in the Strait of Hormuz and the Red Sea as the most likely driver, while stressing that this scenario is not its base case.

Regional refining capacity is also under scrutiny. World Oil has reported repeated strikes near Jizan, home to a 400,000 barrel-per-day refinery.

How the campaign developed

Osprey Risk Solutions has tracked a clear escalation pattern since early July 2026, issuing a steady run of critical alerts as events unfolded. In mid-July, Yemeni government forces struck Sanaa International Airport to block an Iranian delegation flight. Saudi-led coalition (SLC) air defences then downed Houthi ballistic missiles over the Kingdom’s southwest provinces, and the Houthis vowed retaliation.

That retaliation followed through late July and August. Osprey recorded repeated Houthi drone and missile attacks on oil facilities and airports in southwest Saudi Arabia, alongside strikes on commercial vessels and oil infrastructure near Yanbu on the Red Sea coast. Saudi air defences intercepted a significant share of these launches, although some got through.

Days after the pipeline strike, the SLC confirmed a further wave of ballistic missile and drone attacks on several Saudi cities near the Yemeni border, and Osprey’s alert reported casualties and damage to civilian property. Osprey’s analysis also links IBMGs operating from Iraq to recent strikes on Saudi oil infrastructure, with Houthi personnel reportedly providing operational support from Iraqi territory.

In response to this pattern, Osprey has raised its airspace risk rating for southwest Saudi Arabia and the Red Sea region to High at all altitudes.

Operational risk beyond fuel

For operators planning schedules to, from, or over Saudi Arabia, Yemen, and the wider Red Sea region, the campaign creates direct hazards as well as cost pressure. Osprey’s advisories have consistently flagged unannounced missile and drone launches, which pose a latent hazard to aircraft at all altitudes. They have also flagged airspace congestion from increased military air activity, and the potential for further airport closures near the Yemeni border through Notices to Airmen (NOTAMs).

While the situation remains fluid, operators should treat the following as standing precautions:

• Identify divert and alternate airports on an operational, risk-based footing for any schedule involving Saudi Arabian aerodromes or airspace.
• Confirm that flight plans, special approvals, and overflight permits are current before departure, particularly for the sensitive southwestern provinces.
• Monitor airport and airspace NOTAMs, bulletins, and advisories closely, given the Kingdom’s history of limited advance notice on military activity.
• Assess fuel cost exposure separately from operational risk; the two are now moving together, although each requires a different mitigation strategy.

Outlook

Osprey’s most recent forecast assessed it likely, at 70 percent probability, that the Houthis would continue drone and missile launches against Saudi aviation, maritime, and oil sector targets over the following six weeks. The East-West Pipeline strike and the mid-September attacks that followed are consistent with that assessment.

A resumption of SLC and US strikes against Houthi and Iraqi IBMG targets in Yemen and Iraq remains a realistic possibility. Such strikes would extend the cycle of retaliation, and Osprey’s elevated risk rating for the region is likely to hold for as long as that continues.

For the oil market, the key question is how much additional Gulf capacity the disruption removes, and for how long. For airlines, a jet fuel market that is already historically tight has little room left to absorb another supply shock. Operators should plan for continued volatility in both fuel costs and regional airspace risk through the remainder of the short-term outlook window.

This analysis draws on Osprey Risk Solutions analyst updates and forecasts published between early July and mid-September 2026, together with external market reporting current at the time of publication. Developments are moving quickly, so verify the latest position against current Osprey advisories and NOTAMs before making operational decisions.

Sources referenced

• Osprey Risk Solutions analyst updates and forecasts, early July to mid-September 2026
• CNBC, “Oil rises to $99 on report Iran launched second undisclosed attack on U.S. Navy ships,” 8 September 2026
• CNBC, “U.S. oil tops $105 as Saudi Arabia reportedly cancels some crude cargoes after pipeline closure,” 15 September 2026
• Reuters (via BOE Report), “Saudi cancels some oil cargoes after pipeline hit, top buyer chasing alternatives,” 15 September 2026
• CNN Business, “Saudi Arabia has shut the East-West crude oil pipeline. Why does this matter?,” 14 September 2026
• World Oil, “Saudi Arabia halts energy operations after Houthi attacks,” 8 September 2026
• PBS NewsHour, “What lagging jet fuel supplies could mean for airlines and travelers,” 17 April 2026
• TimeTrex, “The 2026 Global Jet Fuel Crisis,” 23 April 2026
• Fortune, “The jet fuel crisis never existed, sources say,” 16 June 2026
• DWU Consulting, “US Jet Fuel Supply 2026: Refinery Constraints & Tightness,” 14 July 2026