Middle East Conflict Impacts Oil Market, Qantas Warns of Significant Fuel Cost Increase

SYDNEY, April 14 (Central News Agency) — Qantas Airways announced today that soaring aviation fuel prices could lead to an increase of up to A$800 million (approximately NT$18 billion) in the company's costs for the second half of this year.

Agence France-Presse reported that Qantas stated in a market update that the Middle East conflict has more than doubled aviation fuel prices, and prices remain "extremely volatile."

The report indicated that aviation fuel costs for the second half of 2026 are now expected to reach A$3.1 billion to A$3.3 billion, up from the previously forecast A$2.5 billion.

This surge highlights how geopolitical shocks are rapidly impacting airlines' cost bases. Aviation fuel prices have soared due to disruptions in Middle Eastern crude oil supply, forcing refineries to reduce production.

Qantas stated that although the company has hedged most of its crude oil exposure, it remains significantly exposed to the surge in aviation fuel price spreads.

Qantas said it is currently working with the government and suppliers, expecting no fuel supply issues for the remainder of April and May.

"Given the ongoing uncertainty in global fuel supply chains, we are closely monitoring the situation," the Qantas Group said.

However, Qantas also noted that it is benefiting from increased travel demand to Europe as passengers avoid Middle Eastern routes.

According to Reuters, to offset rising costs, Qantas is increasing fares and shifting flights to stronger demand routes, such as Europe, where demand remains robust, while cutting domestic capacity by about 5 percentage points in the June quarter.

"In response, the Group has reallocated capacity from the United States and its domestic network to increase flights to Paris and Rome."

Qantas said it now expects unit revenue for international routes to increase by 4% to 6% year-on-year in the second half of 2026, double its previous forecast.

For domestic flights, revenue is expected to rise by about 5%, higher than the previously anticipated 3% increase.

Qantas stated that further action may be required regarding fuel prices in the future.

"The Group will continue to closely monitor the dynamic environment and reserves the option to take further action to mitigate increasing fuel costs over time." (Compiled by Lee Pei-shan) 1150414