Britain faces the risk of having to ration jet fuel due to shortages linked to the Iran conflict, according to an expert. The potential drop in supplies to critically low levels has raised concerns about the impact on Europe’s jet fuel market and upcoming summer travel. Some airlines, like KLM and Lufthansa, have already canceled flights due to fuel concerns.
Goldman Sachs, a major investment bank, has highlighted the severe tightness in the market caused by the ongoing closure of the Strait of Hormuz. The UK is particularly vulnerable due to its limited stockpiles, high dependence on imports, and restricted refining capabilities. Rationing measures are being considered to support the travel sector.
Jet fuel prices have doubled since the conflict began in February, prompting warnings from Keir Starmer about potential disruptions to travel plans. The UK, as Europe’s largest net importer of jet fuel, lacks strategic reserves and relies on commercial inventories as a primary buffer. Critical inventory levels, especially in Britain, could lead to rationing.
The Gulf region supplies approximately one-fifth of globally traded fuel, making Europe heavily reliant on these flows. Airlines are now seeking alternative sources, driving prices up further. Concerns about potential flight cancellations, fare increases, and reduced passenger benefits have been raised due to the impact of fuel costs on airline operations.
Both Air France and American Airlines anticipate significant increases in their jet fuel bills, which are likely to result in higher fares and fewer perks for passengers. While UK ministers suggest alternative supply sources, industry experts express less optimism. Fuel suppliers warn that the UK faces challenges in jet fuel supply visibility, mainly due to its reliance on Middle Eastern imports.
The European Commission plans to provide guidance to airlines amidst high uncertainty, preparing for various scenarios. Analysts point out the UK’s reduced refining capacity following the closure of the Grangemouth refinery and concerns about the Prax Lindsey refinery. Energy policies in Europe have contributed to higher prices and increased import dependence, according to the Tony Blair Institute.
Fuel suppliers foresee manageable demand in May but caution that disruptions could arise by mid-to-late June if the Strait of Hormuz remains closed.
