EasyJet Hedged 80% of Fuel Supply as Prices Jump — Easyjet Flights
EasyJet hedged 80% of its fuel supply as easyjet flights faced sharply higher jet fuel prices after the conflict in the Middle East disrupted supplies. European jet fuel rose more than 120% between late February and early April, and carriers are already adjusting fares and capacity.
Amaar Khan on refinery closures
Amaar Khan, head of jet fuel pricing at Argus Media, said refinery closures and rising demand have tightened the market. “We have had five refinery closures in the last two-and-a-bit years in Europe, whereas jet fuel demand has been rising year on year,” he said. “So, we see weaker supply, greater demand.”
Jet fuel traded at $831 per tonne in Europe in late February before the first US and Israeli airstrikes, then touched $1838 per tonne by early April. After that peak, prices retreated but stayed above $1500 per tonne, leaving airlines with a higher fuel bill even after the sharpest jump eased.
The Strait of Hormuz and Europe
The Strait of Hormuz has been blocked for the past eight weeks, and there are concerns that physical shortages could occur in some areas in the coming months if it does not reopen soon. The Gulf region accounts for about 20% of the jet fuel traded on international markets each day under normal circumstances.
Europe relies on imports for more than half of its jet fuel, and more than half of those imports typically come from the Gulf. The UK gets 65% of the jet fuel it needs from imports, and two of the refineries that closed were British, leaving just four refineries in operation in the UK.
Airlines and ticket prices
Fuel typically accounts for 25% to 30% of airlines' operating costs, according to the International Air Transport Association. As costs have increased, many airlines have already pushed up ticket prices, and some have trimmed their capacity.
For passengers, that means the pressure is already feeding into fares and available seats rather than waiting for a later disruption. EasyJet's 80% hedge gives it more cover than carriers that are less protected, but the wider market still points to higher costs across easyjet flights and the summer travel period.
