Jet Fuel Surge to $110 Barrels Adds $1.5B Costs, Hits Southwest Shares 30%
Crude oil prices topped $110 per barrel as Strait of Hormuz conflict halts traffic, pushing jet fuel costs up $1.75 per gallon. Southwest, which ended fuel hedging in 2025, faces part of an estimated $1.5B quarterly fuel-expense increase, contributing to a roughly 30% share decline this month.
1. Surge in crude prices boosts jet fuel costs
Oil prices climbed past $110 per barrel as conflict in the Strait of Hormuz disrupted shipments, driving jet fuel costs higher by up to $1.75 per gallon in recent weeks.
2. Southwest faces billions in added fuel expense
With fuel accounting for 20–25% of operating costs, Southwest’s share of increased spending could top $1.5 billion this quarter, joining peers in absorbing nearly $5 billion in extra expenses across the industry.
3. Fuel hedging strategy ended in 2025
Southwest, once one of the most active fuel hedgers, exited its hedging program last year, leaving the carrier fully exposed to today’s spike in oil-derived costs.
4. Southwest shares down 30% this month
Investors have sent Southwest’s stock down roughly 30% over the past month as mounting fuel costs and the loss of hedging protection weigh on profit forecasts.