Will average Gulf Coast jet fuel price exceed $3.00/gallon for H1 2026?

UAL's Q1 all-in of $2.78 implies Q1 spot averaged ~$2.50-$2.60. Their Q2 $4.30 assumption implies Q2 spot ~$3.90-$4.10. If UAL's assumption is correct, H1 spot average ~$3.25, above threshold. But UAL's Q2 is an assumption, not realized — actual will be whatever the spot market does. For H1 avg to fall below $3.00, Q2 actual spot would need to average ~$3.45 or below, a ~$0.50+ reversal from UAL's assumption. This is possible if Iran tensions de-escalate mid-Q2, but my prior weight is against dramatic reversal given active geopolitical pressure. Probability ~72% YES.

Consider the spread between UAL's all-in cost and EIA Gulf Coast spot. In calm periods, the spread is ~$0.15-$0.25. In stressed periods (like now), transportation and logistics costs widen. UAL's Q1 all-in $2.78 could correspond to Q1 spot ranging from $2.40 (wide spread) to $2.60 (narrow). If Q1 spot is lower-end $2.40, threshold for H1 clear becomes $3.60 Q2 avg — plausible but not certain. If Q1 spot $2.60, threshold $3.40 Q2 — easier. UAL's Q2 $4.30 all-in could correspond to spot anywhere from $3.80-$4.10. Center my estimate on Q1 spot ~$2.55, Q2 spot ~$3.95, H1 avg ~$3.25. Above threshold with moderate confidence.

UAL cut FY guidance by ~33% on their own fuel assumption of $4.30. Management has strong incentive to be realistic — not conservative, not optimistic — on this assumption to avoid future credibility damage. If they're pricing in $4.30 for Q2, they are seeing early-Q2 market signals pointing to sustained elevation. Oil typically doesn't reverse sharply mid-quarter absent discrete de-escalation events. Probability ~75% that UAL's assumption is directionally correct and H1 average clears $3.00. Meaningful tail on oil reversal.

Two-month window remaining in H1 (May-June). If current spot jet fuel is in the $3.50-$4.00 range (inferred from UAL's $4.30 all-in for Q2), and H1 calendar is Jan-Jun, weighted average already favors crossing $3.00 unless May/June collapse substantially. For H1 average to fall below $3.00, May+Jun would need to average $2.70 or below (assuming Jan-Apr average ~$3.30), representing a $1+ reversal from current levels in 2 months. Base rate for such reversals in a geopolitically active period is low. Probability ~70% YES.

Historical Gulf Coast spot jet fuel: $3.00 threshold crossed regularly when Brent is above $80. With UAL's $4.30 all-in implying Brent equivalent in the $90-$100 range for Q2, the spot is very likely above $3.00 for most of Q2. Q1 already was ~$2.50 average. Even with Q2 dramatic softening, H1 math for below-$3.00 requires material reversal. Probability ~73% YES.

Some skepticism on UAL's $4.30 assumption as a signal: airlines are incentivized to guide conservatively on fuel to give guide cushion. If true spot for Q2 ends up at $3.50 (all-in ~$3.80), H1 spot avg ~$3.00, right at threshold — binary resolution could swing either way. Moreover, Q1 spot might have been lower than I'm assuming if UAL's spread was widened by one-time costs. Slight downward adjustment to ~68%.

UAL's Q2 $4.30 all-in implies Gulf Coast spot around $3.90-$4.10. With Q1 spot ~$2.50, H1 average likely $3.20-$3.30, above threshold. Probability ~72% unless sharp reversal in May-June.

The key unknown is the spread between UAL's all-in cost and EIA spot. If spread widened to $0.30+ under stress, Q1 spot might be as low as $2.40, raising the bar for H1 clear. Still probability favored YES given current Q2 elevation.

UAL guide cut explicitly on fuel — they would not cut guide if fuel was likely to normalize below $3.00 spot. Management's actions are the strongest signal we have. Probability ~73% YES.