The International Energy Agency has described the de facto closure of the Strait of Hormuz and damage to regional infrastructure as producing the largest disruption to the global oil market in its history. Energy shipments from the Middle East have been at a standstill following Iran's threats to attack vessels in a critical trade waterway as retaliation against U.S.-Israeli strikes. This escalation has sent global oil and gas markets spiraling.
Oil prices have increased significantly due to the conflict, with the price per barrel spiking from the mid-$60 range in early 2026 to over $100 by early March 2026. Global oil markets are well integrated, so a disruption in one part of the world leads to a global spike in crude oil prices. This integration means that price shocks in the Middle East rapidly transmit to consumers worldwide.
Jet fuel prices have surged beyond $150 per barrel as of March 2026, driven by fears and realities of supply disruptions in the Strait of Hormuz. The airline industry is facing operational strain, with total seat capacity entering and leaving the Middle East reduced from an average of 700,000-800,000 seats to below 500,000 seats as of March 2026 due to the Iran conflict. Concurrently, the average storage rate for the top 10 operators in the Middle East increased from around 3% in the fourth quarter of 2025 to 22% in March 2026, indicating grounded fleets. As of March 2026, the largest aircraft type in storage among top 10 Middle East operators is the A320, with 65 aircraft stored.
In response to the fuel crisis, Norse Atlantic Airways is raising $110 million through a share issuance. The airline is raising the $110 million to handle increased fuel prices due to unrest in the Middle East. Norse Atlantic Airways has also taken a loan of 660 million kroner to secure operations until the share issuance is completed.
Norse Atlantic Airways has withdrawn its annual profit forecasts. The airline is considering a sale or merger through a strategic review. Operationally, Norse Atlantic Airways added additional flights between London Gatwick and Bangkok in response to increased demand due to changes in global flight operations from recent developments in the Middle East.
Despite the challenges, Norse Atlantic Airways delivered total unit revenue in its own network (TRASK) of 6.4 US cents per available seat kilometer in March 2026, an increase of 59% compared to March 2025. The airline had passenger growth of 14% to 124 thousand passengers in March 2026 with a load factor of 99%, up 4 percentage points year-over-year. Norse Atlantic Airways reports good ticket sales.
Airlines are employing varied fuel hedging strategies across regions to manage costs. Most U.S.-based carriers discontinued their fuel hedging programmes, with Southwest Airlines being the last to end the practice in March 2025. In contrast, Asian and European carriers have hedged between 30% and 87% of their fuel needs for at least the first half of 2026, and some until the end of 2026. Examples of hedged airlines include Air France-KLM, Air New Zealand, British Airways, Cathay Pacific, EasyJet, Iberia, Lufthansa, Qantas, Ryanair, TAP Portugal, and Wizz Air.
The liquefied natural gas (LNG) market has also faced disruption, with international LNG prices jumping more than 50 percent. The United States is the world's largest LNG exporter and a major EU supplier. Construction is underway to expand U.S. LNG export capacity, but most facilities will come online in coming years, not weeks or months.
U.S. drivers are facing higher prices at the pump due to soaring crude oil costs. However, natural gas markets are more fragmented than oil markets, moderating price effects on U.S. consumers. This fragmentation helps cushion some domestic impacts despite global volatility.
China's energy position reveals significant import dependencies. China uses an estimated 15 to 16 million barrels of oil daily. Gulf countries are a major source of oil for China, with barrels from Saudi Arabia and Iran accounting for more than 10% of its imports each. Russian oil accounts for nearly a fifth of China's energy imports, making Moscow by far Beijing's biggest oil supplier. China is the world's largest coal producer, accounting for more than half of global production, and oil and gas account for just over a quarter of China's total energy consumption.
The war in the Middle East is upending lives and livelihoods in the region and beyond, dimming the outlook for many economies. The shock is global, yet asymmetric, with energy importers more exposed than exporters, poorer countries more than richer ones, and those with meager buffers more than those with ample reserves. Large energy importers in Asia and Europe are bearing the brunt of higher fuel and input costs.
Vulnerable countries are facing severe supply and food security challenges. Economies heavily dependent on oil imports in Africa and Asia are finding it increasingly hard to access supplies, even at inflated prices. Low-income countries are especially at risk of food insecurity due to higher food and fertilizer prices and tighter financial conditions.
Clean energy technologies are not immune from supply chain disruptions stemming from geopolitical disputes, such as China's restrictions on critical mineral exports. This vulnerability highlights broader systemic risks in the transition to renewable energy amid global tensions.
The exact current status of negotiations or actions regarding the Strait of Hormuz closure and when normal shipping might resume remains unclear. Similarly, what specific strategic options Norse Atlantic Airways is considering in its review, such as potential buyers or merger partners, has not been disclosed.
How long the elevated oil and jet fuel prices are expected to persist and their projected impact on global inflation and economic growth are uncertain. The total financial impact on Norse Atlantic Airways from the increased fuel prices and the loan terms for the 660 million kroner loan have not been detailed.
The specific measures being taken by governments or international bodies to mitigate the economic effects of the Middle East conflict on vulnerable countries are not yet fully known.