Key insights
- Ryanair warns that a prolonged Middle East conflict could disrupt jet fuel supplies to Europe, potentially impacting 25% of its supplies in May and June. This could lead to higher ticket prices, exacerbating inflationary pressures. While Ryanair's fuel supply is currently secure, the risk of higher prices remains. The situation highlights the vulnerability of the airline industry to geopolitical events and rising energy costs.
Investing.com -- Jet fuel supply to Europe could face disruption starting in May if the Middle East conflict continues, potentially putting 25% of Ryanair’s (LON:RYA) supplies at risk through May and June, CEO Michael O’Leary told Sky News on Wednesday.
The International Air Transport Association estimates that around 25% to 30% of Europe’s jet fuel demand originates from the Persian Gulf, making it among the most exposed regions to supply impacts from the U.S.-Israeli war.
"If the war finishes and the Straits of Hormuz reopens by the middle or end of April, then there’s no risk to supply," O’Leary said. "If the war continues and the disruption to supply continues, we think there’s a reasonable risk that some low level, maybe 10%, 20%, 25% of our supplies might be at risk through May and June."
O’Leary said the Irish airline, Europe’s largest by passenger numbers, has not cut any flights because its fuel supply is currently secure. The CEO warned that the risk of higher ticket prices remains through April, May and June.
He told Ireland’s Business Post newspaper on Sunday that he expected summer airfares to rise by more than 3% year-on-year due to a combination of capacity constraints and higher oil prices for less well hedged competitors.
The budget carrier said in January it had covered about 80% of its jet fuel requirements for the fiscal year to the end of March 2027 based on a crude oil price of $67 per barrel.
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