Jet fuel price volatility is hitting airlines hard globally, with the International Air Transport Association (IATA) warning that not all carriers are in a position to hedge their exposure to rising fuel costs.

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The warning was issued by IATA’s head of fuel, Daniel Chereau, at the S&P Global Energy Middle East Petroleum and Gas Conference, according to a Reuters report on Wednesday.

The development comes as jet fuel refining margins surge to record levels, increasing cost pressures across the global aviation industry.

Jet fuel hedging refers to the use of financial instruments such as futures, swaps, and options to lock in or stabilise fuel prices in advance, helping airlines reduce exposure to sudden increases in jet fuel costs and improve cost predictability.

In Nigeria, jet fuel hedging is not practiced in the aviation fuel market by airlines or marketers, leaving operators fully exposed to global price swings and FX-driven volatility.

What they are saying   

IATA said airlines are experiencing uneven impacts from jet fuel price movements, depending on their ability to hedge exposure.

  • “Many airlines have been hit hard by price swings in the jet fuel market, and some are not in ‌a position to hedge their exposure, the International Air Transport Association’s head of fuel said on Wednesday,” the report read in part.
  • He noted that airlines with more advanced hedging strategies are better able to cushion fuel price volatility.
  • Chereau said widening crack spreads have intensified cost pressures across the aviation sector.
  • He added that the impact of fuel volatility varies significantly depending on exposure levels and hedging capacity.

Chereau also disclosed that jet fuel refinery profit margins, known as crack spreads, have surged to record levels, with North West Europe peaking at over $121 per barrel in March compared with about $30 per barrel before geopolitical disruptions in late February.

He further noted that demand disruption is beginning to emerge in aviation, driven by fuel costs, flight cancellations, and intermittent fuel shortages in some locations.

Hedging gap and Nigeria’s jet fuel exposure 

In Nigeria, jet fuel hedging is currently not practiced by airlines or marketers, leaving operators fully exposed to market volatility.

This was disclosed by the Managing Director and Chief Executive Officer of Raven Energy, Adeyinka Adewole, in an exclusive chat with Nairametrics.

Adewole said airlines in developed markets typically use instruments such as futures, swaps, and options to manage fuel price risk, but such tools are largely absent in Nigeria’s aviation fuel ecosystem.

  • Nigerian airlines and marketers do not hedge jet fuel exposure.
  • Operators remain fully exposed to global price and FX fluctuations.
  • Hedging tools commonly used internationally are not widely deployed in Nigeria.

He explained that this gap continues to amplify instability in aviation fuel costs, especially during periods of global price shocks.

More insights   

Nigeria’s aviation sector has been under sustained pressure from rising Jet A1 prices, leading to operational disruptions, policy responses, and higher air travel costs, including increases in both domestic and international fares in recent months.

The Airline Operators of Nigeria (AON) had earlier warned that rising Jet A1 costs were making domestic flight operations increasingly difficult to sustain.

  • The group said prices rose from about N900 per litre in February to over N3,000 per litre within weeks, describing the increase as unsustainable.
  • AON had threatened to suspend nationwide flight operations on April 20, 2026, but the Federal Government intervened to prevent disruption.
  • Government approved a 30% relief on statutory charges owed by airlines, including FAAN and NAMA fees. The NMDPRA introduced temporary indicative Jet A1 pricing of N1,760 to N1,988 per litre in Lagos.

Airlines adjusted operations, with Rano Air suspending some routes and Air Peace cutting Abuja–London flights to three weekly services.

Jet fuel marketers, however, rejected claims of extreme spikes such as N3,000 per litre, arguing that such levels did not reflect actual market transactions.

What you should know   

Recent developments show Nigeria is increasingly positioned within global jet fuel supply shifts.

Nairametrics reported that Dangote Refinery emerged as the world’s largest exporter of jet fuel in April 2026, driven by rising production and disruptions in global fuel trade flows due to closure of Strait of Hormuz.

Bird added that aviation fuel demand in Africa remains relatively low compared to other regions, creating export opportunities for surplus output.