Jet Fuel Prices Rise After Strait of Hormuz Disruption

Higher ticket prices for air travellers in Europe are inevitable because of the high cost of jet fuel, Willie Walsh, head of the International Air Transport Association, told the BBC. The closure of the Strait of Hormuz as a result of the conflict in Iran has had a dramatic impact on jet fuel prices.

Europe and the UK in particular are usually highly reliant on imports from the Strait of Hormuz region for jet fuel, and the UK and Europe are particularly dependent on jet fuel from the Strait of Hormuz.

Even if the Strait of Hormuz were reopened tomorrow, the impact of disruption caused by the conflict in the Middle East could still be felt into next year, Walsh said. The disruption to crude oil supplies and damage to refining facilities in the Gulf meant that even if the Strait of Hormuz were to reopen now, fuel prices were unlikely to come down quickly.

"Whichever way you look at it, I think this issue will continue for a number of months to come, and may indeed continue into next year," Walsh said.

Walsh told the BBC there was still concern the industry in the UK could face shortages of fuel over the summer, although he insisted there was no need to panic. "I think the major problem facing the UK is timing," he explained.

You normally expect to see a 25% increase in flights and fuel requirements in the months of July and August versus March, Walsh said. " If sufficient alternative supply is not sourced, there may be some shortages when we get into the peak summer period, he stated. However, widespread cancellation of flights could be avoided, Walsh said.

"There's just no way airlines can absorb the additional costs they're experiencing," Walsh explained. Over time it is inevitable that the high price of oil will be reflected in higher ticket prices, he added. The increase in fuel prices has already been reflected in the cost of long-haul flights, some of which have seen significant increases.

Some fares in Europe have actually come down because carriers have been introducing discounts, and some airlines have cut their European fares recently because of a lack of demand. On the broader oil market effects of the conflict, President Trump said oil prices went up "very little" due to war with Iran.

President Trump said "I thought it would go up more" regarding oil prices and the war with Iran.

Last week, the EU said there was no regulatory reason why US-grade jet fuel should not be used by European airlines, provided its introduction was managed carefully. On Wednesday, the EU's energy commissioner Dan Jorgensen said he did not expect a serious shortage in the short term but could not rule out supply issues in the longer term.

The chief executive of the travel operator Tui, Sebastien Ebel, said he did not expect shortages over the coming months.

A government spokesperson said UK airlines were "clear that they are not currently seeing a shortage of jet fuel". Fuel suppliers keep stocks of bunkered fuel to support their resilience, the government spokesperson added. The government was working with the aviation industry to keep flights operating and consulting on measures to help airlines plan realistic flight schedules which will avoid last-minute disruption and protect holidays.

Tui sees summer sales fall 10% due to cautious UK customers.