US-Iran Peace Deal Lowers Oil Prices but Airline Surcharges Persist

The Federal government of the United States and Iran signed a Memorandum of Understanding and framework agreement to end a regional war that began in February 2026. The deal led to the reopening of the Strait of Hormuz, ending a conflict that had caused global jet fuel prices to spike above US$200 per barrel and crude oil to fluctuate before returning to approximately US$70 per barrel.

Despite a recent 30 percent drop in North American oil prices and a 23 percent decline in average jet fuel costs over the last month, many airlines continue to levy high fuel surcharges. In Canada, Air Canada and WestJet maintain elevated fares due to strong travel demand, though WestJet reduced its companion voucher levy from $60 to $40 and Porter Airlines halved its reward flight surcharge to $20. Low-cost carrier Flair Airlines has maintained its pricing while monitoring market conditions.

Similar pressures are affecting the Caribbean, where carriers including Caribbean Airlines, interCaribbean Airways, and Winair implemented surcharges and capacity cuts. Fuel costs for some regional carriers now account for up to 40% of total expenses. The International Air Transport Association projects average jet fuel costs for 2026 will reach US$152 per barrel, a 70% increase over 2025, suggesting that fuel prices may take two months to fully stabilize.