Britain faces a potential shortage of jet fuel due to disruptions caused by the Iran conflict, according to an industry expert. Concerns have escalated as supplies are expected to reach critically low levels, impacting Europe’s jet fuel market and potentially affecting summer travel plans. Airlines like KLM and Lufthansa have already taken preemptive measures, canceling flights amid fuel concerns.
Goldman Sachs, a leading global investment bank, highlighted the severe strain on the market due to the ongoing closure of the Strait of Hormuz. The UK is particularly vulnerable due to its limited reserves, heavy reliance on imports, and constrained refining capabilities. Rationing measures are being contemplated to support the aviation industry during this challenging time.
Jet fuel prices have surged since the conflict began, prompting warnings from Keir Starmer about potential disruptions to travel plans. The UK, as Europe’s largest net importer of jet fuel, lacks strategic reserves and heavily depends on commercial inventories, which could dwindle to critically low levels, necessitating rationing.
With the Gulf region supplying a significant portion of globally traded fuel, European airlines are scrambling to secure alternative sources, driving prices higher. The aviation sector may face flight cancellations, consolidation, and fare hikes as fuel costs constitute a substantial portion of operating expenses. Companies like IAG and Air France anticipate significant cost increases, likely leading to fare adjustments and reduced passenger amenities.
Despite reassurances from UK ministers about alternative fuel sources, industry experts express skepticism. Fuel suppliers caution that the UK’s visibility in jet fuel supply is limited compared to other European nations, mainly due to its reliance on Middle Eastern imports.
The European Commission plans to provide guidance to airlines amidst the uncertainties, preparing for various scenarios. Analysts point to the UK’s diminished refining capacity following the closure of key refineries, emphasizing the need for stable supply chains. Concerns over energy policies contributing to higher prices and import dependency have been raised, underscoring the need for strategic planning to mitigate disruptions.
Fuel suppliers project manageable demand through May but anticipate disruptions by mid-to-late June if the Strait of Hormuz remains closed. The industry faces challenges ahead, requiring proactive measures to ensure the stability of jet fuel supply chains.