Economy
High prices pressure airlines, but EU sees no jet fuel shortage
There are no signs of jet fuel shortages in Europe in the coming months despite the energy shock from the Iran war, though high prices are prompting airlines to cut uneconomic routes, the European Union’s transport chief said on Friday.
The Strait of Hormuz, a key shipping lane linking the Gulf to global markets, has been largely shut for the past three months, cutting oil supplies by about 14 million barrels per day, or around 14% of global demand.
The EU has so far weathered the disruption as the Middle East accounts for about 20% of its jet fuel imports, with U.S. and Nigerian supplies largely filling the gap.
Some routes cut, higher fares possible
“There is currently no jet fuel shortage in Europe. We have no signs that we will have a shortage in the coming period,” Sustainable Transport and Tourism Commissioner Apostolos Tzitzikostas told Reuters, adding regional airports were most at risk.
The main concern is the surge in price. The International Air Transport Association (IATA) says jet fuel accounts for 25-30% of airlines’ operating costs.
“This is why we see that some airlines are choosing to cancel some of their routes that didn’t make any economic sense,” Tzitzikostas said.
Passengers may not feel the full impact in higher fares until later this year or next as airlines’ hedges expire, though Tzitzikostas said the situation was “very different airline to airline.”
Analysts expect oil prices to average around $90 a barrel this year, up 40% from February.
Looking to the year-end, Tzitzikostas said the situation would be “very difficult” if Middle Eastern supplies remained disrupted.
“It’s critical that the war stops and that the Strait of Hormuz opens and this needs to happen as soon as possible …. We should always keep in mind that Europe is prepared. We have the emergency stocks in our member states,” he said.
He added that the Commission would coordinate any releases and there was no need to discuss redistributing reserves for now. “For the time being, there is a certain degree of stability.”
Tehran and Washington have held talks since an early April cease-fire, but with limited progress and repeated violations.
Sources told Reuters this week that even if a deal is reached soon, it is likely to be a temporary arrangement, with Hormuz staying under Iranian control.
Beyond aviation, a prolonged conflict could hit the global economy. The OECD has warned that it could sharply slow growth to levels last seen during the 2008-2009 financial crash or the COVID-19 pandemic.
“It’s not only an issue of jet fuel or fuels. We will have even possibly a global recession,” Tzitzikostas said.
President Recep Tayyip Erdoğan on Friday said participation finance, often known as interest-free or Shariah-compliant finance, represents a “fairer” model for the whole world, while announcing plans to merge Türkiye’s three state-owned Islamic banks.
“Participation finance is a fairer and safer model not just for Muslims, but for the entire world,” Erdoğan told the 3rd Global Islamic Economy Summit.
Erdoğan said Ziraat Katılım, Vakıf Katılım and Halk Katılım banks would be consolidated, stressing that the move would create “significant synergy” and initiate a new era in the sector.
“Combining the strengths of these three participation banks will create significant synergy. God willing, the sector will gain new momentum,” the president noted.
Erdoğan also outlined plans for an initial public offering (IPO) of another participation bank, Emlak Katılım, which he said would allow citizens to become partners in the growth.
The institution was restructured in 2018 from Emlak Bank and has since become a key player in the system, he said.
Erdoğan did not provide a timeline or further details on either move.
Security climate being eroded
The president also used his speech to refer to the multiple simultaneous crises the Islamic world is facing, citing Israeli atrocities in Gaza, the West Bank and East Jerusalem, as well as instability linked to the Iran war and disruptions in the Strait of Hormuz.
He said the Middle East conflict and its fallout are “negatively affecting not only our brotherly nations in the Gulf but the entire world.”
“The climate of security in our region is being increasingly eroded by the effects of war, crisis, fratricidal conflict and uncertainty,” Erdoğan said.
He went on to repeat his frequent saying that “a fairer world is possible,” which he said means humanity is “not bound to a single system in the economy or in international relations.”
He described Islamic finance as being based on justice, ethics, risk-sharing, sustainability and social welfare.
Temporary fixes not a solution
Referring to global financial risks, Erdoğan cited Institute of International Finance data showing that global debt reached $350 trillion in the first quarter of 2026.
“How sustainable this debt burden is remains a serious question that must be answered for the future of the global economy,” he noted.
He stressed structural problems cannot be solved with temporary fixes.
“You cannot treat conditions that require surgery with a simple bandage,” Erdoğan said.
He argued that recurring financial imbalances would persist unless deeper reforms are implemented.
“Financial crises cannot be prevented without transitioning to an economic and financial paradigm centered on the principles of justice, ethics, production and equitable distribution,” Erdoğan noted.
He called for increased criticism and objections toward the current global financial architecture and said more effort should be exerted to bring concrete alternatives to life.
“The more we embrace the principles set forth by Islamic economy, and the more we make this model our focal and starting point, the faster we will reach our goals,” said Erdoğan.
He also reiterated his long-standing criticism of interest-based finance, saying: “Where there is interest, there is no blessing.”
Türkiye’s annual inflation rate increased slightly in May to 32.6% from 32.4% in April, official figures showed Friday.
On a monthly basis, consumer prices climbed 1.7%, a slowdown from the 4.2% increase in April, but still driven mainly by increases in housing and water costs as well as electricity, gas and other fuels, the Turkish Statistical Institute (TurkStat) said.
According to the Istanbul Chamber of Commerce (ITO), the annual rate for May was 36.8% in Türkiye’s largest city.
Last month, Türkiye’s central bank raised its year-end inflation forecast to 26% from 16%, mainly because of higher energy prices due to the Middle East war.
But it predicted inflation would fall to 15% by the end of next year and to just 9% in 2028.
Several staff members were injured after a Lufthansa Boeing 787-9 Dreamliner tipped onto its nose at Frankfurt Airport on Thursday, the German airline said.
The incident occurred at 12:45 p.m. (1045 GMT) just before passengers boarded the plane, which was scheduled to fly to Los Angeles.
Luftahnsa said the aircraft “unexpectedly” retracted while it was parked, causing the nose of the plane to fall several meters to the ground and breaking off the door flaps of the nose gear bay.
Cabin crew and ground staff were on board and several were injured and received medical treatment, the airline said.
Another Lufthansa spokesperson said later on Thursday that the wounded, which included two of its crew members, sustained only light injuries.
They were taken to the hospital to receive treatment.
The flight to Los Angeles was canceled.
“Experts are currently on site and inspecting the aircraft,” Lufthansa said.
The plane is expected to be moved as early as Thursday evening to a hangar “where further inspections will take place before the aircraft is repaired,” the airline added.
According to the Aerotelegraph website, the damaged jet is only one year old and was delivered to Lufthansa in January.
Boeing said Thursday in an emailed statement that it is “aware of the incident” and “supporting our customer.”
Video from the scene appeared to show the front wheels of the wide-body plane sliding forward and the plane’s nose falling down several meters, as a ground crew member standing nearby quickly backed away.
The doors to the nose gear bay broke off upon impact.
A 2021 incident at London’s Heathrow Airport also involved the nose landing gear of a Boeing 787. According to a report by the U.K.’s Air Accidents Investigation Branch, a 787-8 was undergoing maintenance at a gate when its nose landing gear retracted during testing, causing the aircraft’s nose to drop onto the pavement.
Investigators found that a locking pin intended to prevent retraction had been inserted into the wrong position, allowing the gear to fold despite safeguards designed to keep it extended.
Türkiye’s trade gap narrowed 15.7% on a yearly basis to $5.6 billion in May, mainly due to the calendar effect and fewer working days during the month, marking a nine-month low, Trade Minister Ömer Bolat said on Thursday.
The deficit decreased as both exports and imports fell in the month, with imports showing a starker decline of nearly 11%.
Announcing the preliminary foreign trade in Ankara, the minister said that exports dropped by 9.3% to $22.5 billion in May, while imports fell by 10.7% to $28.1 billion in the same period.
Last month had a long 9-day holiday that coincided with Eid al-Adha or Qurban Bayram, the second of two major holidays observed among Muslims, which reflected on the figures.
Starting his speech, Bolat noted that the world economy is going through a difficult period, with ongoing geopolitical challenges and disruptions in logistics chains, and he said that despite an environment where global economic growth forecasts are being revised downwards, Türkiye continues to show resilient performance in growth, employment, and exports.
He recalled the national income grew by 2.5% in the first quarter of the year, marking 23 consecutive quarters of growth, referring to the recently shared gross domestic product (GDP) data.
“In May 2025, we broke the monthly export record in the history of the republic with $24.8 billion. Official holidays in May naturally had a negative impact on exports; however, by also reducing imports and our foreign trade deficit, there was an improvement in the export-to-import coverage ratio,” the minister said.
Export-to-import coverage ratio surged by 1.2 points to 80.1% last month, reaching the highest level in the past 20 months.
“In May, exports reached $22.5 billion, a decrease of 9.3%. Our daily average exports reached $1.3 billion,” he added.
Bolat highlighted that there are no national or religious holidays in June, and noted that export figures are expected to increase this month compared to last year, and that higher numbers could be observed on an annualized basis.
He also stated that on May 22, a new all-time high daily export figure of $2.4 billion was reached, and added: “Our exports to Gulf countries dropped by 30% monthly in March due to shockwaves from conflicts. However, we recovered in April and saw an increase. A similar trend continues in May. Exports are actually increasing, but the calendar can sometimes have negative effects.”
Trade Ministry, in a written statement, separately said that despite the calendar effect, this May marked the third-best May ever, considering export figures. It also noted that the month had six fewer working days compared to last year.
Bolat said Türkiye has also made significant progress in exporting medium-high and high-tech products, reporting that the export share of such products reached 44% in the January-May period.
He stated that imports fell by 10.7% to $28.1 billion in May, with exports decreasing by $2.3 billion while imports dropped by $3.4 billion, thus improving the foreign trade deficit.
Bolat also noted that imports fell by 0.8% in the January-May period, explaining that the reduction in gold imports also played a role in this decline.
“There has also been some deceleration in automotive imports in the first five months. These acted as a brake on the increase in imports. On the other hand, our petroleum imports increased by nearly $2.5 billion,” he said.
Bolat stressed that a much clearer trade picture will emerge at the end of June as most of the calendar effects will disappear.
“On an annualized basis, we have $273.5 billion in exports, a modest increase of $250 million. However, we will make the real assessment when we complete the first half of the year,” he suggested.
He also informed that the annualized imports increased by 4.2% to $367.2 billion.
He also suggested that the trade deficit is close to the levels seen at the end of December last year, pointing out that at the end of the first five months, the annualized foreign trade gap has increased by only $1.45 billion.
Hitachi Energy, a subsidiary of the Hitachi conglomerate, inaugurated on Thursday its new Power Transformers Factory and Service Center in Kocaeli’s Dilovası, an industrial hub in northwestern Türkiye.
“The new facility represents a strategic investment to strengthen manufacturing capacity, service capabilities, and support the accelerating energy transition across Türkiye and key export markets,” the company said.
Launched with an opening ceremony, the facility stands out as one of the significant investments in the company’s nearly 60-year history of transformer production in Türkiye.
The facility, brought to life within the scope of a strategic investment of $70 million (TL 2.8 billion) announced in 2025, aims to strengthen Türkiye’s position as a regional hub for production, export, and service between Europe, Asia, the Middle East, and Africa.
With this new investment, Hitachi Energy’s production capacity in Türkiye is set to increase by 70%, thereby supporting the country’s growing need for a reliable, flexible, and sustainable energy infrastructure.
The Dilovası facility is also expected to increase workforce capacity by around 30%, creating new opportunities for skilled talent while contributing to local development.
The facility is designed to produce small, medium, and large-scale power transformers for public utilities, renewable energy projects, industrial institutions, transportation infrastructures, and data centers. The site also strengthens export capacity, serving customers in more than 50 countries worldwide.
Tamura Masami, Japan’s Ambassador to Ankara, stated that the investment is an important step for Türkiye’s energy transformation and regional energy infrastructure.
“Türkiye is undergoing a significant transformation by increasing its renewable energy capacity while simultaneously strengthening its energy transmission infrastructure. We believe that this investment in Dilovası is of great value not only in terms of bringing advanced technologies to Türkiye but also in terms of sharing engineering know-how, supporting local employment, and strengthening Türkiye’s position as a regional production hub,” he said.
“We are pleased to see that the long-standing strong cooperation between Japan and Türkiye is also evolving into concrete projects in the energy field.”
Maxine Ghavi, Hitachi Energy’s head of Europe, stated that the investment strengthens Europe’s position as a global leader in transformer technology and production.
“Facilities like Dilovası, equipped with advanced capabilities, form a crucial part of Europe’s industrial infrastructure that enables grid expansion, electrification, and system resilience across the continent and beyond,” Ghavi said.
Yasemin Öztekin, Hitachi Energy Türkiye General Manager, emphasized the importance of the investment, suggesting that the facility “is a testament to our long-term confidence in Türkiye and our strong commitment to contributing to the country’s energy and industrial goals.”
Increasingly hot and dry weather is disrupting crop planting across Asia, sparking concerns about food supplies in the world’s most populous region, and an expected severe El Niño could inflict further damage.
From India’s grain-producing northwestern plains to Australia’s eastern wheat belt, and from Thailand’s rice fields to Indonesia’s vast palm oil plantations, hot weather and below-normal rains are hurting crops and forcing farmers to reduce planting, farmers, analysts and traders said.
El Nino-driven dryness is a double blow for farmers already grappling with fertiliser and diesel shortages caused by the Iran war.
Wheat prices have risen about 20% since the start of 2026, largely on concerns over drought in key U.S. growing regions. Rice prices at major Southeast Asian export hubs have climbed around 15% over the past month on rising production costs and fears of tighter supplies.
One of the strongest El Ninos on record is widely expected to develop in the second half of 2026, bringing hot-dry weather to Asia and excessive rains to the Americas, with global climate change making things worse.
“The El Nino impact globally starts with Southeast Asia, India, Australia, before it has wider implications downstream in North America and South America,” said Chris Hyde, a U.S.-based meteorologist at satellite data and imagery firm SkyFi.
Hyde said early signs of drought are already visible on the company’s high-resolution imagery platform, across parts of Asia.
Hot-dry weather hit farms
In India, the meteorological department last week further reduced its forecast for the four-month monsoon season, which delivers about 70% of annual rains.
“With temperatures across most parts of the country remaining well above normal, conditions are currently unfavourable for the timely sowing of summer crops,” said one New Delhi-based dealer with a global trade house.
“Planting is likely to be delayed due to the late onset of the monsoon, but greater concern lies in the possibility of below-normal rainfall and prolonged dry spells after its arrival.”
India mainly grows rice, soybeans, pulses, sugarcane and corn in the summer season.
For Southeast Asian countries, dryness is hitting rice and palm oil yields in some areas.
“Everybody is worried (about drought), it’s risky,” said Nerawat Oramah, a 47-year-old farmer in central Thailand’s Chainat province.
“For my second harvest, I have to wait and see the situation. It’s a risk for everyone (if there is not enough water), there will only be one harvest.”
Thailand and the Philippines plant their main rice crops in June-July, while Vietnam and Indonesia are now sowing their second-season crops.
Indonesia’s most populous Java island and some areas in northern Sumatra, south Kalimantan and Sulawesi have not experienced any rain for more than 10 days, according to the country’s meteorological agency, with medium to low rainfall expected in June.
Higher prices
Rice prices are edging up even though India, which accounts for 40% of global exports, is sitting on ample supplies after years of near-record harvests.
“There is a clear indication of crisis as rice prices have moved substantially higher without any major shortage,” said one Singapore-based trader at an international trading company, adding Thai rice prices have climbed around 15% in the past month.
“India has a huge rice stockpile, several times more than what it needs. But the thinking is that very soon India will start looking at these stocks as a critical asset and may introduce some sort of export curbs if we see problems with the early part of the monsoon.”
However, KKP Research, a unit of Kiatnakin Phatra Bank in Thailand, said some of the impact of the dryness could be cushioned by strong reservoir levels.
“What we are more concerned about is fertiliser supply,” the bank said in a note to Reuters. “We estimate that a fertiliser shortage, if it occurs, could reduce rice production by up to 15-20% in the worst case.”
Recent rains over parched Australian farmland have triggered late wheat sowing, but growers are wary of the El Nino in the coming months that could hit yields.
The Bureau of Meteorology is predicting that many cropping areas across New South Wales and Queensland will see between 20 and 40 millimetres less rain than usual over the next three months.
John Lowe, a farmer near Burcher in central New South Wales, said his total cropping area is still around 30% smaller than it could have been.
El Nino is likely to be neutral for China and the Black Sea region, while bringing more rains to the Americas.
“Statistically speaking, there is not much correlation with weather in the U.S. and El Nino, during the summer,” said Drew Lerner, an agricultural meteorologist and president of World Weather Inc.
“In a lot of years, we can come up with a little bit more moisture in an El Nino summer. But that does not really mean above-normal rainfall.”
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