United Airlines prepares for oil to hit $175 a barrel and stay above $100 next year as industry endures worst disruption since COVID

(SeaPRwire) –   The U.S.-Israel conflict with Iran has caused the most significant disruption to the airline sector since the COVID-19 crisis, and United Airlines is preparing for a period where oil prices stay elevated through 2027.

Oil prices have not only skyrocketed, but air travel to major Middle Eastern airport hubs has also been disrupted—compelling aircraft to take detours that consume more fuel.

In a Friday letter to staff, CEO Scott Kirby noted that jet fuel costs have more than doubled over the past three weeks; if prices remain steady at this rate, it would add $11 billion to the airline’s annual expenses.

United shelled out $11.4 billion on fuel last year, so current prices might push this year’s total fuel expenditure above $20 billion. The airline recorded an adjusted net income of $3.5 billion in 2025, and Kirby mentioned that its highest-earning year ever brought in $5 billion.

However, he emphasized that United’s cash reserves, profit margins, and balance sheet are robust, and customer demand remains strong. Notably, the past 10 weeks have included the 10 highest-grossing booked revenue weeks in the airline’s history.

Even so, he admitted that it would be challenging for United to keep passing fuel costs onto customers if oil prices stay high for an extended period. He revealed that the airline’s contingency plans factor in oil reaching $175 per barrel and not dropping back to $100 until late 2027.

Last Friday, Brent crude climbed 3.26% to end at $112.19 a barrel, while U.S. oil increased by 2.27% to settle at $98.32. However, the Strait of Hormuz—through which 20% of the world’s oil is transported—remains mostly shut, and analysts have cautioned that prices could hit $150 or even $200 a barrel if it doesn’t reopen shortly.

Jet fuel prices have jumped even more sharply because of stricter refining limitations. Northwest Europe has witnessed record peaks of around $239 a barrel, and Asian jet fuel costs are hovering near $200 a barrel—close to their recent high points.

Although Kirby believes there’s a strong possibility that United’s projected scenario won’t materialize, he stated that the airline will reduce capacity during specific times and in certain locations.

This translates to fewer flights during off-peak periods—like red-eye journeys and trips on Tuesdays, Wednesdays, and Saturdays in the second and third quarters. United will also cut capacity at its Chicago O’Hare hub and suspend service to Tel Aviv and Dubai, both of which are still under attack from Iran.

The cumulative impact of these adjustments will be a roughly 5 percentage point reduction in capacity, though United intends to reinstate its full flight schedule in the autumn.

“Let me be clear: Our long-term plans for aircraft deliveries or total capacity for 2027 and beyond remain unchanged, but there’s no sense in wasting cash in the short term on flights that simply can’t cover these fuel costs,” Kirby stated.

Simultaneously, he pledged to refrain from furloughing staff, delaying aircraft orders, switching to regional jets, implementing cost-cutting measures, or putting investments on hold. The CEO added that United still expects to receive around 120 new aircraft this year.

Additional funds will be allocated to technology and facilities, including the airline’s lounge clubs, new hub infrastructure, and an expansion at Newark Airport.

Kirby brushed off cost cuts and delayed investments as “at most, minor savings—they’re distracting, unnecessary for United, and they hinder our goal of building the greatest airline in aviation history.”

Other airlines are also putting contingency plans in place. Scandinavian carrier SAS announced it will cancel approximately 1,000 flights due to increasing fuel costs.

Air France-KLM’s plans involve reducing service to parts of Asia if fuel costs for return flights to Europe become prohibitive.

“Southeast Asia relies far more on fuel transported through the Gulf than Europe does,” Air France-KLM CEO Ben Smith told the Financial Times. “We can source fuel from Europe, but when we fly to a Southeast Asian city, we won’t be able to bring the plane back… If there’s no fuel available, you can’t operate the flight.”