EUROPE’S aviation fuel supply could be disrupted from May if the conflict in the Middle East continues, potentially putting 25% of Ryanair’s supplies during May and June at risk, chief executive Michael O’Leary told Sky News on Wednesday.
The International Air Transport Association (IATA) estimates that between 25% and 30% of kerosene demand in Europe comes from the Persian Gulf, which, it warned, places the region among the most exposed to the impact on supply resulting from the war between the United States and Israel.
O’Leary said Ryanair has purchased forward about 80% of its supply needed until March next year at $67 a barrel of oil.
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For the remaining 20%, the cost has now almost doubled.
“The more immediate concern is jet fuel supply,” he said in a Sky News interview.
“We together with our fuel suppliers are constantly looking at the market rates, but we don’t expect any disruptions to supply until about early May.”
“The fuel companies are happy there won’t be any disruption until early May, but if the war continues, we do run the risk of supply disruptions in Europe in May and June, and obviously we hope the war will finish sooner than that, and the risk to supply will be eliminated,” O’Leary stated.
“If the war ends and the Strait of Hormuz reopens in mid-to-late April, there will be no risk to supply,” O’Leary said.
“If the war continues and supply disruption persists, we believe there is a reasonable risk that a small part, perhaps 10%, 20% or 25% of our supplies, could be in jeopardy during May and June.”
O’Leary noted that the Irish carrier has not cancelled any flights because its fuel supply is currently secured, but that the risk of ‘significantly higher’ ticket prices remains for April, May and June.
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 competitors with less efficient hedges.
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