Europe's Jet Fuel Supply at Risk Amid Iran Conflict
Europe has only six weeks of jet fuel remaining before shortages begin, a situation attributed to the ongoing Iran war, according to Fatih Birol, executive director of the International Energy Agency (IEA).
Birol warned that flight cancellations could occur "soon" if oil supplies from the Middle East are not restored within the next few weeks.
"I can tell you soon we will hear the news that some of the flights from city A to city B might be cancelled as a result of lack of jet fuel," he told the Associated Press.
Airline Responses to Rising Fuel Costs
KLM, part of the Air France-KLM group, announced on Thursday plans to cut 160 flights over the coming month due to high kerosene jet fuel prices. Although these cancellations represent less than 1% of its schedule, they highlight the financial pressures facing the airline industry.
The Dutch airline clarified:
"This concerns a limited number of flights within Europe that, due to rising kerosene costs, are currently no longer financially viable to operate. There is no kerosene shortage.
"KLM expects a busy May holiday period and is making sure passengers can travel to their holiday destinations as planned."
Impact of the US-Israel-Iran Conflict on Energy Markets
The US-Israel war on Iran has disrupted global energy markets since initial strikes at the end of February. In retaliation, Iran has effectively closed the Strait of Hormuz, a critical oil transit route.
Although the US and Iran agreed to a two-week ceasefire last week, negotiations to end the conflict failed over the weekend, and hostilities continue.
Brent crude oil futures prices, a global benchmark, remain over 30% higher than pre-war levels. This rapid increase in petrol prices has placed pressure on US President Donald Trump.
Despite these developments, outright jet fuel shortages have not yet occurred, as shipments dispatched before the conflict have continued to arrive. The final cargoes have now reached Europe.
Birol stated that Europe has "maybe six weeks or so [of] jet fuel left," according to the Associated Press. His remarks align with those of Airports Council International Europe, a lobby group that recently wrote to the EU’s energy and transport commissioners warning the bloc is at risk.
Industry sources note that airports and airlines typically maintain about six weeks of fuel supplies under normal conditions. However, the prolonged Iran war has depleted any additional reserves, and alternative suppliers lack sufficient capacity to replace Gulf supplies.
"In the past there was a group called Dire Straits," Birol said. "It’s a dire strait now, and it is going to have major implications for the global economy. And the longer it goes, the worse it will be for the economic growth and inflation around the world."
He further explained the consequences:
"The impact will be ‘higher petrol prices, higher gas prices, high electricity prices’, with some parts of the world ‘hit worse than the others’."
Airlines' Flight Cancellations and Hedging Strategies
Some airlines have cancelled flights that would be loss-making due to increased fuel prices, particularly those without hedging arrangements to protect against significant price rises.
However, even airlines with hedging strategies are considering cancellations. Air France-KLM, which has hedged 87% of its fuel exposure, still opted to reduce flights due to the potential costs.
The airline focused cancellations on busy routes between Amsterdam’s Schiphol Airport and London and Düsseldorf, where passengers can be rebooked on alternative flights. Airlines in the EU and UK can adjust flight schedules without paying compensation if passengers are offered alternatives.
British airline easyJet's chief executive, Kenton Jarvis, stated:
"We have visibility to the middle of May and we have no concerns."
