Airlines Scramble for Jet Fuel as Hormuz Disruption Drags On

The months-long closure of the Strait of Hormuz has left the world grappling with severe jet fuel shortages, as airlines scramble to keep their operations afloat. The closure, a result of the U.S.-Israeli conflict with Iran, has restricted energy trade, particularly oil, which constitutes roughly 20 percent of the global supply.

Several European airlines have reported risks of running out of jet fuel, with the United Kingdom, France, and Germany being particularly vulnerable due to their heavy dependence on Middle Eastern fuel supplies. Before the conflict, Europe relied on the Middle East for about half of its jet fuel imports. Iran has been providing limited fuel through the Hormuz, but the timing of normal trade resumption remains uncertain due to the ongoing conflict.

Europe's fuel inventories stand at around 38 million barrels, equivalent to roughly 30 days of demand. The International Energy Agency (IEA) and the EU Energy Commissioner have forecasted potential jet fuel shortages towards the end of summer. Europe has sought alternative fuel imports from the U.S., Nigeria, Canada, India, and South Korea.

Despite these efforts, several airlines have had to cut flights due to the high volatility and cost of jet fuel, which accounts for 20-25 percent of an airline's operating expenses. Some companies, like Ryanair and Southwest, have hedged their fuel purchases to mitigate the impact, but the effectiveness of this strategy is uncertain.

The crisis has led to increased fuel prices, with jet fuel reaching a high of $215.32 a barrel at the end of March before dropping to nearly $130 a barrel.