McKinsey report says airfares could rise up to 25%
Heads up if you're planning to fly soon: airline tickets might get a lot pricier.
A new McKinsey report says fares could rise by up to 25% because jet fuel prices are expected to soar, with the price gap between crude oil and refined fuel possibly averaging more than $50 per barrel by 2026 (that's more than double the usual).
This spike is being driven by low inventories, global tensions, and fewer exports from key refineries in Asia and the Gulf.
Asia and Gulf refineries cut exports
Jet fuel supply is getting squeezed as refineries in Asia and the Gulf (that make up 40% of global output) are cutting back on exports.
Many were already maxed out before recent disruptions, so there's not much wiggle room for extra production.
Even though some output has ticked up thanks to higher margins, ongoing restocking means prices will likely stay high.
Airlines likely to pass fuel costs
Since fuel makes up about 30% of ticket prices, airlines are expected to pass these rising costs onto travelers.
So if you're budgeting for your next trip, be ready for fares that could be noticeably higher for several months.