Europe at risk of ‘systemic’ jet fuel shortage, flight cuts: Analyst

If the blockade of the Strait of Hormuz continues, Europe’s airline industry is at risk of a “systemic” jet fuel shortage in the next few weeks, potentially leading to hundreds of flight cuts, according to experts.

Claudio Galimberti, chief economist at Rystad Energy, told CNBC’s Ritika Gupta on “Europe Early Edition” on Tuesday that the situation facing airlines “depends very much on how many barrels will flow through the strait.”

“The situation could become systemic within the next three, four weeks, so there could be a huge reduction in flights in Europe from May and June onwards,” he said.

Traffic through the strategically important waterway came to a halt after Iran closed it during the war with the US and Israel, sending oil prices soaring.

After peace talks between the US and Iran failed over the weekend, the US launched a naval blockade of ships entering and leaving Iranian ports in the Strait of Hormuz in an effort to cut off Iran’s oil exports and increase pressure on Tehran.

Rico Luman, senior economist at ING, said: “There are many warnings of shortages in the coming weeks if supplies are not replenished.”

“We’ve seen these ships stop now, so the supply from the Middle East is gone, and we need replacements,” Luman told CNBC’s Steve Sedgwick and Ben Boulos on “Squawk Box Europe.”

ACI Europe, which represents airports across the European Union, said last week that the reductions could happen as early as three weeks, disrupting the peak travel season with “harsh economic impacts.”

Many EU member states count on an economic boost from the summer travel season, with air travel generating 851 billion euros (about $1 trillion) a year in GDP for European economies and supporting 14 million jobs, according to the group.

“We’ve already seen disruptions in Asia, so Asia is linked to the Middle East, especially being most dependent on the Middle East for jet fuel. So we’ve seen disruptions in countries like Vietnam and Thailand on air travel, but it’s also impacting Europe because it’s a global market,” Luman said.

The US and Israel’s war with Iran, which began on February 28, caused oil prices to exceed $100 per barrel, causing a blow to energy, and airlines were most severely affected. Jet fuel prices rose 103% month-over-month through March, according to the International Air Transport Association.

In the US, the price of jet fuel nearly doubled, from $2.50 per gallon on February 27 to $4.88 per gallon on April 2.

As of 7:09 a.m. ET Tuesday, West Texas Intermediate futures for May delivery were down 1.86% at $97.24 a barrel, while international benchmark Brent crude for June delivery was down 0.33% at $99.03 a barrel.

Rystad Energy’s Galimberti said markets were expecting a “quick resolution” to the crisis, but with developments on the US blockade over the weekend, “it looks like it’s going to be a longer process.”

“If you look at the history of conflicts, the longer they take to resolve, but after the first eight weeks, nine weeks, the more likely they are to turn into a protracted conflict,” he said, referencing the Russia-Ukraine war.

AurignyA carrier based on the island of Guernsey announced in late March that it would reduce flight capacity on some routes between April and June due to “increasing global volatility”, as well as add a temporary £2 ticket surcharge.

Scandinavian airline SAS said it was 1,000 flights canceled In April, while Ryanair CEO Michael O’Leary said the carrier would consider Cancel some flights and reduce capacity In the summer if fuel shortage continues.

Wizz Air’s The CEO warned in March that it expected 50 million euros Attack on net profit of 2026While Virgin Atlantic CEO Cornel Koster said financial Times It said on Tuesday the airline would struggle to make a profit this year even after adding fuel surcharges.

“No matter what happens in the Gulf going forward… some disruption to global energy prices is here to stay,” Koster told the FT.