The Jet Fuel Crisis Threatening Europe's Summer

Peak holiday season is weeks away, and Europe is facing a problem it’s never quite encountered before: there may not be enough jet fuel to keep all its planes in the air.

This isn't a rumour - the head of the International Energy Agency has warned that Europe could run critically low on jet fuel in roughly six weeks if it can't secure enough alternative supplies. That warning landed just as airlines are trying to plan their busiest season of the year.

Here's what's happening, what it means for travellers, and what long-term investors should make of it.

Why Fuel Is Suddenly Scarce

The short version: the Iran war closed the Strait of Hormuz, and Europe's jet fuel supply chain hasn't recovered.

Before the Iran war began in late February, West Asian refineries supplied roughly 75% of Europe's jet fuel imports.

Europe uses around 1.6 million barrels of jet fuel per day, and domestic refineries cover about 1.1 million of that. The remaining 500,000 barrels used to arrive mostly from West Asia, but that supply is now gone.

Europe is sourcing replacement fuel from the US and Nigeria, but it's not enough, and it's not cheap. Europe is now competing against buyers in Asia and Australia for the same limited global supply. As one analyst put it, Europe has to "fight for every cargo.”

Two Different Problems: Price and Supply

It's worth separating two things that sound similar but have very different consequences.

The first problem is price. Jet fuel has roughly doubled since late February, going from around $80 a barrel to over $150, with average prices hitting close to $180 a barrel in late April.

That's painful for airlines, but manageable. They can pass some of it on through higher fares, cut unprofitable routes, and lean on fuel hedges they bought in advance.

The second problem is physical availability.

Paying more for fuel is rough, but manageable - but not having fuel at all is a different problem entirely.

For now, physical shortages aren't imminent. But if demand surges through peak summer, as it typically does, the gap between supply and need will narrow fast.

How Airlines Are Responding

Airlines operate on thin margins at the best of times, typically in the low single digits, and spend anywhere between 20-40% of their revenue on fuel. When fuel costs double, the maths stops working quickly.

The main levers airlines are pulling are cutting flights, raising fares, and hedging.

Hedging means locking in fuel prices in advance through financial contracts, so that a sudden price spike doesn't immediately destroy the cost base.

Ryanair has hedged around 80% of its fuel for the summer and has promised no surcharges on bookings.

EasyJet has hedged around 70% but is still exposed on the rest, and has already reported significant additional fuel costs and weaker forward bookings.

Lufthansa has hedged roughly 80% of its 2026 requirements and describes itself as better positioned than most competitors.

But hedges only cover what was arranged before the crisis. The unhedged portion of every airline's fuel bill is now subject to volatile market prices, and smaller or less well-capitalised carriers are in a much harder position than the larger ones.

On the operational side, Lufthansa has cancelled around 20,000 short-haul flights through October.

SAS cancelled roughly 1,000 flights in April.

KLM has trimmed capacity.

Air France has raised economy fares on long-haul routes by up to 100 euros.

Ryanair's CEO Michael O'Leary has warned bluntly that if fuel stays this expensive through late summer, some European airlines will fail.

What This Means for Travellers and Inflation

For anyone flying in Europe this summer, the most likely outcomes are higher fares, especially on longer routes, and more last-minute schedule changes. Some routes may disappear temporarily if they're not profitable at current fuel costs.

Analysts expect more travellers to choose closer-to-home destinations, shorter trips, or surface travel rather than flying, partly because fares are higher and partly because booking confidence is low.

The inflation angle matters too.

Higher transport and travel costs feed directly into services inflation, which is already one of the stickier components that central banks have been watching.

If fuel costs keep prices elevated through the summer, that could complicate interest rate decisions in Europe - another variable in an already complicated picture.

What This Means for Long-Term Investors

If you hold a broad global equity ETF, airline and energy companies are already in there. You don't need to do anything specific because of this news, but it's useful context for understanding what's happening inside your portfolio.

Airlines are structurally cyclical businesses with high sensitivity to fuel costs, regulatory risk, and consumer confidence. The companies best positioned to weather this are the ones with strong hedging strategies, flexible cost structures, and balance sheets that can absorb a bad quarter or two.

For most long-term investors, trying to time airline stocks around a single summer's fuel crisis carries more risk than reward. The situation could resolve quickly if the Strait of Hormuz reopens, and worsen if it doesn't.

Sticking with broad exposure and a long time horizon tends to serve better than chasing or dumping travel names based on one season's headlines.

The Takeaways

If you live in Europe and have flights booked this summer, it's worth checking your airline's cancellation and rebooking policies now rather than closer to the date.

It’s a good time to splurge for the travel insurance that covers disruption, and mentally prepare yourself for the possibility of fare increases or schedule changes.

Ultimately, energy disruptions don't stay contained. They ripple through transport, logistics, consumer prices, and eventually inflation data.

Supply chains and energy systems that seem stable shift quickly when geopolitics intervenes. That’s why diversification across sectors, regions, and asset classes is designed precisely for moments like this one.