Last updated: 10th May 2026 | Author: Cameron MacDonald
Source: Port Watch. Data as of 10.05.2026. For illustrative purposes only.
The war between Iran, Israel and the U.S. has caused significant energy shocks, and a fragile ceasefire – while welcome – cannot offset the damage already done.
Two of the most prominent sectors affected in current public discourse are air travel and energy. More than 60,000 flights to and from the Middle East have been cancelled since the conflict’s inception on February 28, directly affecting 6 million Passengers.
Additionally, the closure of the Strait of Hormuz has been described by the IEA as the largest supply disruption in the history of the global oil market. The global oil supply has reduced by 8 million barrels per day in March, and Liquified Natural Gas (LNG) spot prices in Asia rose by 140% in the same month.
Rising flight cancellations and fuel costs are reshaping the global aviation industry and forcing airlines to reallocate capacity, whilst the underlying strong travel demand continues to underpin the sector.
How has war reshaped aviation?
The scale of the aviation reshuffling is significant, in the month of March there was an 111% increase in flight cancellations globally. Major carrier British Airways have cancelled flights to Dubai and Tel Aviv until May 31, at a minimum, and the EU is providing guidance on public service obligations in the event of jet fuel shortages because of the Iran war.
As Middle Eastern travel hubs remain unreliable, airlines are choosing to redirect capacity toward alternative routes and destinations. Consequently, European leisure travellers who had budgeted for a Middle East or Asia-Pacific trip via the Gulf are now looking for alternative destinations.
A striking concern for both carriers and customers is the threat of price hikes thanks to aviation fuel costs, which hit an all-time high of $1,838 per tonne on 2 April. The pressure will be felt most acutely by low cost carriers, which operate on thin margins with little or no fuel hedging; threatening their entire model, if the crisis persists. Paradoxically, the cost shock has occurred at a moment when underlying, structural demand for air travel is strong.
Before the strike on Iran’s nuclear facilities in 2025, global air travel was forecast to reach 9.8 billion passengers in 2025, with international travel growing at 5.3%. Subsequently, the International Air Transport Association (IATA) recorded a 6.1% rise in total passenger demand in February 2026 – the highest on record. This structural improvement did not evaporate following the breakout of war on February 28.
United Airlines demonstrates how scale and a global network help airlines remain resilient in times of disruption.
Could the crisis produce any beneficiaries?
The carriers best positioned to perform despite this crisis, are those with diversified revenue models and a large network to absorb displaced customers. United Airlines is the clearest illustration: it carried more passengers in Q1 2026 than in any first quarter in its history, with cancellations 44% lower than the next 2 largest U.S. carriers, despite fuel costs rising by $340 million year on year. A mixed customer base demonstrably insulates carriers from macro-economic shocks. With Emirates cutting flights by 50%, North American carriers that have a broad network and product quality could serve displaced customers, benefitting from the crisis.
More broadly, the IATA reported that global air passenger demand will more than double by 2050, with emerging markets being the areas of highest estimated growth. Intra-Africa was identified as the fastest growing option at 4.9% annually, Africa to Asia-Pacific at 4.5%, and intra-Asia-Pacific at 3.9%. India alone is expected to see a 6.4% annual increase, driven by rapid urbanisation, growing middle class, and a market that is underrepresented relative to its population.
The economic shock produced by the Iran war is temporary, oil futures fell following the announcement of a ceasefire. Carriers who have a structurally diversified customer base, such as United Airlines, have an opportunity to capture displaced customers and emerging market growth simultaneously, even as the ceasefire remains fragile.
Geopolitical tensions are driving demand for North American LNG and the expansion of midstream infrastructure.
Energy market shift
As Middle East exports of oil and gas experience disruption in the coming months and years, countries in Asia and Europe must diversify away to nations like the U.S. to offset price issues and replenish reserves. The U.S. currently accounts for approximately 60% of European LNG imports – a rise of 24% since Q1 2021. The EU, India, Japan, South Korea are likely to increase their purchases of North American LNG – especially from the U.S., which has a surplus.
Canada is another alternative, the LNG terminal in Kitimat, British Columbia has been increasing exports to Asia, dispatching five shipments to Japan, South Korea, and the Philippines in the first ten days of March – more than half of the total throughput for February.
The consequences of the recent war in the Middle East will extend well beyond the next 2-3 years, with more medium- and long-term investment required to supplement potential increases in trading volume. The Strait of Hormuz bottleneck has been exposed and demonstrated a need for diversification; and if North America is to capitalise, greater infrastructure investment must be provided.
A study conducted by the Interstate Natural Gas Association of America (INGAA) indicated that $1 trillion in expenditure is needed in the U.S. and Canada by 2052. Canadian Prime Minister Mark Carney has announced a wave of major infrastructure improvements, including Phase Two of LNG Canada which will double LNG production, and the recent war has accelerated the political and commercial case for such investment.
What’s next?
The geopolitical shock created by the war in Iran has crippled Middle Eastern energy exports and travel capacity. For aviation and North American energy infrastructure, the newest Middle East crisis is paradoxically a moment of intense opportunity. United Airlines has shown strong performance – illustrating that aviation can thrive despite geopolitical shocks.
The wider context of another Middle Eastern conflict is further evidence that regions such as Europe are far too dependent on one source of energy. Consequently, North American energy, which has seen heavy investment and government support, is positioned to offer a more stable alternative for Europe and Asia, even as the conflict’s future remains uncertain.
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