Middle East War Blocks Strait of Hormuz, Driving European Jet Fuel Prices from $831 to $1,838 per Tonne

Jet fuel prices in Europe have more than doubled in recent weeks due to the war in the Middle East, rising from $831 per tonne in late February to $1,838 per tonne by early April. Prices have remained above $1,500 per tonne since then, prompting hundreds of flight cancellations that have left passengers frustrated and stranded.

Many airlines, especially low-cost carriers, have canceled flights with low occupancy or low profitability.

The Strait of Hormuz has been blocked for the past eight weeks, cutting off supplies from the Gulf region, which accounts for about 20% of the fuel traded on international markets each day. More than half of Europe's jet fuel imports typically come from the Gulf. S.

And Israeli airstrikes occurred in late February, exacerbating the disruption. Europe had about 37 days' supply of jet fuel available before the conflict, according to procurement intelligence firm Beroe, but that has likely dropped to 30 days. Stocks at the Amsterdam-Rotterdam-Antwerp hub are at their lowest level in six years, Beroe reported.

The International Energy Agency believes 23 days is the critical point at which some airports would run out of fuel. The head of the International Energy Agency warned in mid-April that Europe had maybe six weeks of jet fuel left. S.

Are likely to replace a little over half of the lost Middle Eastern supplies, according to the IEA. Despite this, physical shortages may emerge at select airports if the disruption continues. , leaving just four refineries in operation there, including Fawley in Hampshire owned by ExxonMobil.

U.K. had 18 refineries in the 1970s but now imports 65% of its jet fuel needs. K. is Europe's biggest consumer of jet fuel. Fuel accounts for 25-30% of airlines' operating costs, according to the International Air Transport Association.

EasyJet hedged 80% of its fuel supply for the first half of the year at $717 per tonne, but finding the remainder at prevailing prices cost the airline an extra £25 million in March. A flight from London to Melbourne in June now costs 76% more than it did last year, according to consultancy Teneo. Air France KLM, Air Canada, and SAS have cut their summer schedules.

Lufthansa will remove 20,000 flights between now and the end of October, the company announced. Virgin Atlantic has introduced surcharges ranging from £50 on a return economy class ticket to £360 for a business class fare. United Airlines CEO Scott Kirby stated the company would do whatever it takes to recover 100% of the increase in jet fuel prices as quickly as possible.

IAG, which owns British Airways, Iberia, Aer Lingus, Vueling, and Level, has warned that travellers will have to pay more. Wizz Air CEO József Váradi stated that prices on short-haul services within Europe have been going down.

Government is preparing concessions, including allowing airlines to cancel flights at busy airports like Heathrow well in advance without losing take-off and landing slots. Under normal circumstances, airlines lose the right to use slots if they do not use them 80% of the time in a given season.

The European Commission has made it clear that cancellations and severe delays due to jet fuel shortages will qualify as exceptional circumstances. Under EU rules, airlines avoid paying financial compensation to passengers in exceptional circumstances, but passengers are still entitled to reimbursement or an alternative flight.

The European Commission is likely to ease rules restricting tankering.

Martin Lewis warned British holidaymakers that booking flights and accommodation separately risks no protection if flights are cancelled. Under package-travel rules, customers are generally entitled to a full refund if their flight is cancelled. Martin Lewis stated that payment protections such as Section 75 are unlikely to help in circumstances of flight cancellations due to jet-fuel disruption.

Martin Lewis's team reviewed 40 travel insurance policies and found only three or four would cover hotel losses caused by flight cancellations linked to jet-fuel disruption.