As the Iran war drags on, Europe's airline industry is on high alert. Signals are emerging that jet fuel supplies could soon be cut off, but there is no suitable substitute.
On the 16th, according to the New York Times (NYT), Ryanair, Europe's leading low-cost carrier (LCC), said this week that its transaction partners can guarantee sufficient jet fuel supplies only through May, and that fuel shortages could become a reality if tankers are unable to pass through the Strait of Hormuz soon.
In a statement, Ryanair said, "If the Iran war ends soon, there will be no supply disruption," but added, "If the closure of the Strait of Hormuz continues into May or June, we cannot rule out fuel supply risks at some European airports."
Earlier, European Commission Spokesperson Anna-Kaisa Itkonen said on the 14th, "There is currently no evidence within the EU to prove a fuel shortage," while noting, "In particular, supply issues could arise in the near term with regard to jet fuel." On the 9th, Airports Council International Europe (ACI Europe) also sent a letter to the European Commission, warning that if tankers cannot resume transiting the Strait of Hormuz, a jet fuel shortage could begin as early as May.
In recent decades, Europe has seen a string of domestic refinery closures, sharply increasing its reliance on imported jet fuel. In the United Kingdom, where jet fuel consumption is the highest in Europe, the number of refineries fell from 18 in the 1970s to 4 today. As a result, Europe is the largest consumption region for jet fuel transported through the Strait of Hormuz, and supplies via the strait account for about 41% of total imported jet fuel.
According to oil analysts, European airlines have relied in recent weeks on volumes shipped before the war, but most jet fuel supplies via the Strait of Hormuz have now declined. With the de facto closure of the strait after the outbreak of the Iran war, jet fuel prices have also surged. As of the 14th, global jet fuel prices were about 80% higher than before the war, the NYT reported.
Accordingly, airlines worldwide are raising ticket prices and cutting flights on less profitable routes. Dutch flag carrier KLM said it will cancel 80 flights to and from Amsterdam Schiphol Airport starting in May due to the burden of rapidly rising jet fuel costs.
In particular, as demand for jet fuel increases ahead of the summer vacation peak season for airlines, the fuel shortage could worsen. EasyJet, Europe's second-largest airline, said it has secured about 70% of the fuel it needs through the summer, but the remaining volumes are subject to high price volatility.
Fatih Birol, executive director of the International Energy Agency (IEA), said in an interview with The Associated Press that "Europe may have at most about six weeks' worth of jet fuel," adding, "This situation could become the biggest energy crisis we have experienced." The IEA projected that if Europe cannot replace more than half of the jet fuel it had been receiving from the Middle East, supply shortages could begin as early as June.
Abhishek Kumar, a Dubai-based oil analyst, said many European airlines have fixed fuel prices through long-term contracts and flight reductions have been relatively limited, but added, "If this situation continues for another two to three weeks, everyone will feel the effects of the (war)."