Azerbaijan emerges as stable aviation fuel supplier amid global market turbulence

The worsening conflict in the Middle East has added a new layer of pressure to the global aviation industry. Alongside security risks and disrupted routes, airlines are now facing a growing shortage of aviation fuel, a problem that is already affecting both passenger and cargo transportation.

The issue was among the key topics discussed at the 82nd Annual General Meeting of the International Air Transport Association and the World Air Transport Summit, held in Rio de Janeiro. Industry representatives warned that instability in the Persian Gulf has sharply complicated fuel supplies to global markets.

Before the latest escalation, Gulf countries provided around a quarter of Europe’s aviation fuel imports and more than a third of supplies to Africa. However, the disruption of navigation through the Strait of Hormuz, damage to energy infrastructure and problems at terminal facilities have seriously affected this flow. Several regional producers have also been forced to reduce output of petroleum products, including aviation kerosene, because of logistical bottlenecks and storage difficulties.

The market reacted immediately. After the latest exchange of strikes between Iran and Israel, Brent crude futures rose sharply, adding further pressure to fuel prices. This is especially sensitive for aviation, where jet fuel prices often grow faster than crude oil itself.

By late April, global airlines had already begun adjusting their schedules. Some carriers reduced available seats for May by around two million, amid concerns over fuel availability. Analysts warn that if the current trend continues, the aviation sector could face serious disruptions during the peak summer travel season.

The price shock is already visible. Since the beginning of the Middle East crisis, jet fuel prices have reportedly doubled in parts of Southeast Asia and increased by around 70% in Europe. Airlines most exposed to these costs have been forced to raise ticket prices.

Europe’s own production capacity has also weakened. Aviation kerosene output in Europe remains below pre-pandemic levels, while in the United Kingdom the decline is even sharper. This makes the region more dependent on imports at a time when external supply chains are under pressure.

At the same time, the aviation industry is facing another challenge: sustainable aviation fuel remains far from being available at the scale required. SAF is viewed as one of the key instruments for reducing emissions, as it can be blended with conventional jet fuel and used in existing aircraft engines. However, global production still covers only a very small share of total aviation fuel demand.

According to IATA estimates, SAF output in 2026 reached about 2.4 million tonnes, or only 0.8% of total jet fuel consumption. For Europe alone, demand for synthetic sustainable aviation fuel is expected to reach hundreds of thousands of tonnes by 2030. Meeting that target would require a dramatic increase in production capacity and the construction of new commercial plants. Given the cost, complexity and time required, the window for launching such projects before 2030 is narrowing.

Against this difficult international background, Azerbaijan stands out as one of the countries less exposed to the aviation fuel crisis. Its domestic oil production, refining capacity and logistics infrastructure provide the country with a strong buffer against external shocks.

Azerbaijan’s position has been strengthened by the modernization of the Heydar Aliyev Oil Refinery. The facility already produces Euro-5 standard gasoline and diesel, while work continues on jet fuel production units that meet international standards for turbine engines, including kerosene fractions such as TS-1A.

Once the refinery reaches full capacity, Azerbaijan’s annual jet fuel production is expected to rise to around 1 million tonnes. In 2025, production reached 690,700 tonnes, marking an increase of 22.9%.

The country’s current approach is based on maintaining a balanced supply system. Exports are carried out only when domestic demand is fully covered. The main priority remains the needs of Azerbaijani carriers, including AZAL and Silk Way Airlines, which receive fuel under regulated domestic conditions. This helps contain ticket prices and supports the competitiveness of national airlines.

Foreign airlines operating flights to and through Azerbaijan are also supplied with jet fuel. In recent years, major customers have included carriers from Luxembourg, Russia, Türkiye, the United States and France.

Heydar Aliyev International Airport applies a differentiated pricing mechanism linked to international Platts benchmarks. This allows the airport to adapt to global market volatility while maintaining separate tariff models for regular carriers, long-term partners, charter flights and cargo operators.

Compared with several regional markets, Azerbaijan remains in a more favourable position. At airports in Tbilisi, Kyiv and parts of Eastern Europe, jet fuel prices have reached around $2,000 per tonne. In Istanbul, prices exceeded $1,900 in April, while in Pakistan minimum prices in early June started from about $2,100 per tonne.

This gives Azerbaijan an important competitive advantage. Local airlines are protected from fuel shortages, while foreign carriers can rely on stable supply and relatively competitive pricing.

As the global aviation sector enters a period of uncertainty, Azerbaijan’s refining capacity, energy resources and logistical flexibility are strengthening the role of Baku as a reliable aviation hub between Europe and Asia. In a market shaped by shortages, price volatility and geopolitical risk, Azerbaijan’s stability is becoming an increasingly valuable factor.