Analysis: Fears grow for jet fuel availability in Europe

There are growing fears of an imminent shortage of jet fuel, not just in Asia but across Europe.

The UK was due to receive its last tanker of jet fuel from the Middle East despatched before the war on Iran began this week, as prime minister Keir Starmer met energy chiefs to discuss how to address fuel shortages.

The government has contingency plans for shortages but insists none are imminent as it attempts to forestall panic-buying of diesel and petrol.

However, supplies of jet fuel could be the first to become critical with 40% of Europe’s supplies normally shipped through the now-closed Strait of Hormuz and the UK sourcing at least half its supplies from the Middle East following a decline in domestic refining, some of it via the Netherlands.

Alternative supplies should be available from the US and West Africa but will be expensive, with traders competing to bid to redirect cargoes destined for other countries.

Analysts warn jet fuel shortages could hit airlines by the end of April and “definitely” by May without a resumption in supplies, despite the government insisting people should book travel “as normal”.

The Department for Energy Security and Net Zero insisted jet fuel shipments “are continuing to arrive in the UK”.

However, a senior figure at consultancy Rystad Energy told the Financial Times: “Fuel shortages are not far away in some countries [and] higher prices will be felt by all.” 

Fuel storage analyst Global Insights warned of “a supply crunch ahead of peak season” in Europe, while another analyst forecast “rerouting and price adjusting rather than outright shortage”.

Jet fuel prices in Europe were double the pre-war level at the end of last week.

In the US, United Airlines chief executive Scott Kirby forecast the oil price would hit $175 a barrel last week and only return to $100 by the end of the year, describing this as “a reasonable scenario” and “definitely not the worst case”.

A leading UK aviation source told Travel Weekly: “We’re keeping a close eye and maintaining engagement with government. There is contingency planning. We’re not hearing concerns about the [immediate] availability of jet fuel. [But] there are reports of concerns in about a fortnight. There won’t necessarily be fuel shortages but there will be price increases.”

Given the high price of fuel, some carriers in Europe have suspended hedging on future supplies in the hope the war will end soon and prices fall.

Ryanair chief Michael O’Leary said last week: “I don’t think we’ll do any hedging for the next three months. Nobody is hedging with these rates.”

Countries in Asia remain worst affected by fuel shortages at present, with China – a major supplier of refined oil products including jet fuel – having halted all exports.