The CEO of Ryanair has issued a cautionary statement regarding the potential disruption of jet fuel supplies in early May in the event that the Middle East conflict persists.
Since the outbreak of the war in Iran at the end of February, oil prices have experienced a significant increase as a result of Iran’s prohibition of tankers from transiting the Strait of Hormuz, a critical shipping route.
According to Michael O’Leary, Ryanair is “reasonably well hedged” on 80% of its fuel, but it is paying nearly double the price (approximately $150 per barrel) for the remaining 20%.
He cautioned that the conflict’s “broader ramifications” included the escalating cost of oil; however, the “more immediate concern” was the availability of aircraft fuel.
“Fuel suppliers are perpetually monitoring the market.” He said, “We do not anticipate any disruption until early May. However, if the war persists, we are at risk of supply disruptions in Europe in May and June. We are optimistic that the war will conclude sooner and the supply risk will be resolved.”We believe that there is a reasonable risk of some low level, potentially 10% to 25%, of our supplies being at risk during May and June. Therefore, we, like all others in this industry, are hopeful that the conflict will conclude sooner rather than later.The risk of supply is minimal if the Strait of Hormuz reopens and the conflict concludes by April.
Nevertheless, he stated that he does not anticipate cancelling any flights, unlike some of Ryanair’s competitors.
Mr Kenton Jarvis, the CEO of EasyJet, has previously cautioned that European consumers should anticipate an increase in ticket prices by the conclusion of the summer, as the current fuel hedges will expire.
The price of oil has experienced its largest monthly increase in history; however, it has since retreated, momentarily falling below $100 per barrel and reaching its lowest point in a week.
The unenviable situation we are all in is underscored by the reality that even this is a welcome relief: high fossil fuel prices have become the norm.
Currently, the price of a benchmark barrel of Brent petroleum is approximately $100.
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