International Air Transport Association, or IATA, cut its 2026 global airline net profit forecast to $23 billion, citing higher fuel costs and disruptions tied to the Middle East conflict.

The forecast is about half the group's previous outlook and down from an estimated $45 billion in 2025.

Airlines are facing a sharp increase in fuel costs after the closure of the Strait of Hormuz disrupted global energy markets, IATA said.

The organization expects jet fuel prices to average $152 per barrel in 2026, nearly 70% higher than a year earlier, with the industry's fuel bill rising to about $350 billion from $252 billion in 2025.

"Airlines remain profitable in aggregate, but margins are under severe pressure from the fuel cost shock and limited scope for further efficiency gains," the IATA global outlook report said.

Global passenger traffic growth is forecast to slow to 2.1% in 2026 from 5.3% in 2025, while cargo demand is expected to grow at 0.7% from 3.4%.