Iran War Fuel Crisis: UK Transport Sector Faces Rising Insolvency Risk as Jet Fuel Prices Double
Airlines Cut Routes as Fuel Costs Surge
The Iran war's impact on global energy markets has created immediate pressure on UK transport companies, with airlines leading the retreat. According to BBC Business[1], the benchmark European jet fuel price hit an all-time high of $1,838 (£1,387) per tonne last week, compared with $831 before the war began.
Air India, Air New Zealand and Delta Airlines have announced plans to cut flights and increase passenger charges[1]. Delta's fuel costs in the January-March period jumped 14% compared with last year, hitting $2.7bn[1]. The airline is planning to cut around 3.5% of its passenger capacity, targeting red-eye and mid-week flights.
The crisis stems from the Strait of Hormuz, through which the Gulf supplies about 50% of Europe's aviation fuel imports[1]. Iran has effectively closed the strait in response to US and Israeli attacks, with approximately 800 ships believed stuck in the Gulf[2].
Scale of UK Transport Sector Exposure
The CompanyPulse company register shows the scale of the UK transport industry. The database indicates 73,737 companies operating in freight transport by road (SIC code 49410), making it one of the largest transport sub-sectors by company count.
Current insolvency data from CompanyPulse indicates 108,425 companies in liquidation across all sectors, with 16,055 in administration, 43,774 in voluntary arrangements, and 324 in receivership. While sector-specific insolvency breakdowns were not available in the provided data, the large number of transport companies operating in the UK suggests this sector could face challenges from sustained fuel price increases.
Airlines face particularly acute pressure as fuel typically makes up 20-40% of their operating costs[1]. Air India cited "one of the most challenging fuel cost environments that airlines globally have faced in recent years" when announcing increased surcharges for international flights[1].
Manufacturing and Energy-Intensive Industries at Risk
Beyond transport, energy-intensive manufacturing sectors face similar pressures. The conflict has disrupted supplies of petrochemical products from Gulf refineries, including diesel, fertiliser ingredients and industrial products such as helium, essential for microchip manufacture[2].
The Al-Zour refinery in Kuwait alone provides roughly 10% of Europe's jet fuel imports, according to Energy Intelligence[1]. Damage to facilities in the Gulf has halted production, with analysts estimating it will take months to restart and normalise supplies.
Alan Gelder, senior vice-president of Refining, Chemicals and Oil Markets for energy analysts Wood Mackenzie, believes the whole supply chain needs to return to normal, with ships getting to the right place and refineries resuming operation - a process that will take "weeks, not days"[4].
Ceasefire Uncertainty and Long-Term Impact
While news of a two-week ceasefire in Iran caused stock markets to rally and crude oil prices to plunge[4], analysts warn against expecting rapid relief for businesses. The RAC's head of policy Simon Williams says drivers should not expect a significant drop in costs at the pump soon[4].
Rachel Winter from wealth management company Killik & Co told BBC Radio 4's Today Programme: "I would expect it to take at least a few weeks, if not a few months"[4] for costs to fall. Willie Walsh, boss of the International Air Transport Association (IATA), says even if traffic through the Strait of Hormuz resumes now, it will take months for supplies to reach necessary levels[4].
The ceasefire's terms remain contested. According to Faisal Islam[2], there are different accounts about whether traffic will flow freely as suggested by US President Donald Trump, or "via coordination with Iran's Armed Forces and with due considerations to technical limitations", as suggested by Iran's Foreign Minister.
Insolvency Risk Indicators
For UK transport and logistics companies, the combination of doubled fuel costs and uncertain supply chains creates significant cash flow pressure. Airlines have already begun cutting capacity - Delta's 3.5% reduction targets unprofitable routes[1], while Air New Zealand's cancellations are hitting routes in and out of Auckland, Wellington and Christchurch[1].
Road haulage firms, represented by 73,737 companies in the CompanyPulse database, face similar pressures from diesel price increases. The sector's high operational gearing - where fuel represents a major cost component - leaves little room to absorb sustained price shocks.
The broader economic impact extends beyond direct fuel costs. Faisal Islam notes the conflict has created "a direct line from the world's biggest traffic jam to rising petrol and diesel prices, higher airfares and swelling mortgage rates around the globe"[2]. This macroeconomic pressure compounds sector-specific challenges.
As the crisis enters its sixth week since early March, UK transport companies face difficult decisions. Those with weaker balance sheets or high operational leverage to fuel costs may find themselves unable to pass increased costs to customers, particularly in competitive markets. The coming months will likely reveal which sub-sectors have the resilience to weather sustained fuel price elevation and which may see accelerated insolvency filings.