European airports could face jet fuel shortages within three weeks

Summer flights and holidays may also be at risk, says the Airports Council International

Ryanair

European airports have said jet fuel shortages could hit the summer holiday season, if oil supplies do not start to flow through the strait of Hormuz within the next three weeks.

Airports Council International (ACI) Europe wrote to Apostolos Tzitzikostas, the EU transport commissioner, saying the bloc is three weeks away from shortages.

The warning will raise concerns of a risk of flight or holiday cancellations if the US and Israel’s war on Iran continues. Oil prices have soared since the start of March after Iran effectively closed the strait of Hormuz, a key shipping route for exports from the Gulf, in retaliation.

Donald Trump this week announced a ceasefire, but Brent crude oil prices remained at about $96 per barrel on Friday amid concerns over whether it would hold. Before the war, oil traded at about $72.

“If the passage through the strait of Hormuz does not resume in any significant and stable way within the next three weeks, systemic jet fuel shortage is set to become a reality for the EU,” the letter said.

Jet fuel prices have soared since the end of February after the attacks on Iran ordered by Trump and Benjamin Netanyahu, the Israeli prime minister. Global jet fuel prices at the end of last week had more than doubled compared with last year to $1,650 per tonne, according to figures tracked by Iata, an airline lobby group.

The worst hit region has been Asia, with prices up 163% year-on-year. However, prices in Europe were still up by 138%, amid a global scramble to secure fuel.

The last cargo of European jet fuel to pass through the strait of Hormuz before the war began is due to arrive in Copenhagen tomorrow, after the same tanker delivered a partial cargo to Rotterdam on Monday, according to shipping data provider Vortexa.

Europe has typically sourced more than 60% of its jet fuel from Gulf refineries, of which more than 40% was shipped through the strait of Hormuz. Iran’s chokehold on the vital trade strait has forced European buyers to compete with Asia for fresh cargoes from other parts of the world as the last Gulf deliveries have trickled in.

The global market for jet fuel has been particularly exposed to the Gulf disruption because there are fewer alternative routes for exports, according to Australian investment bank Macquarie. While some crude exports have been able to bypass the strait via pipelines, jet fuel does not have these options available.

In the event that trade flows resume, the bank expects the market for refined oil products, such as fuels, to take at least two to three months longer than crude markets to normalise.

The Guardian