Strait of Hormuz Blockade Doubles Oil Prices, Northern European Aviation Industry's Fate Divides by Hedging
The Strait of Hormuz blockade has caused European aviation fuel prices to double, leading to a stark contrast in the fate of Northern European airlines based on their hedging strategies. While some airlines managed to mitigate the impact through hedging, others faced significant flight reductions and profit losses.
📋 Article Processing Timeline
- 📰 Published: May 4, 2026 at 20:42
- 🔍 Collected: May 4, 2026 at 21:01 (19 min after Published)
- 🤖 AI Analyzed: May 4, 2026 at 21:24 (22 min after Collected)
Central News Agency
(Central News Agency reporter Wu Chi-lin, Helsinki, May 4th exclusive report) An oil crisis is sweeping through Europe, leading to a divergence in the fate of the aviation industry. The International Energy Agency (IEA) recently warned that Europe could run out of aviation fuel within six weeks, leading Lufthansa and SAS to significantly cut flights; in contrast, low-cost giants Ryanair and Finnair, which adopted hedging strategies in advance, have successfully weathered the initial impact.
Since the US-Israel coalition began its war against Iran on February 28th, Iran's subsequent blockade of the Strait of Hormuz has hindered European aviation fuel imports. Oil prices have surged from approximately $90 per barrel at the beginning of the year to nearly $190, more than doubling.
According to Aerospace Global News, IEA Executive Director Fatih Birol warned that if the disruption to oil supply continues, Europe's aviation fuel reserves could 'run out in as little as six weeks.'
According to an official statement from Lufthansa Group, Lufthansa canceled up to 20,000 short-haul flights starting April 20th, estimated to save over 40,000 tons of aviation fuel, but also permanently suspending many European regional routes.
SAS followed suit, cutting over a thousand flights in April; KLM also announced the reduction of 160 European flights.
According to Aerotime, an aviation information platform, SAS, the largest airline in Northern Europe, adjusted its strategy in 2025, entering 2026 with zero aviation fuel hedging, buying every barrel spot, leaving no buffer.
After cutting flights, SAS directly increased ticket prices, passing the cost onto passengers, and conceding market share. Reuters reported that competitor Norwegian Air seized the opportunity, adding 120 flights to absorb passengers abandoned by SAS. Analysts estimate this wave of impact will erode hundreds of millions of euros from SAS's profits.
In contrast, operators with high hedging ratios faced less pressure. Ryanair CEO Michael O'Leary stated in an interview with US financial media CNBC that the media has over-exaggerated the aviation fuel crisis.
O'Leary stated that Ryanair has hedged 80% of its aviation fuel demand at an average price of about $67 per barrel, with contracts extending until March 2027. He emphasized: "We are the most hedged and resilient airline in Europe." He also warned that if high oil prices continue into the third quarter, "there will be airline bankruptcies in Europe," specifically naming Hungarian low-cost airline Wizz Air and Air Baltic as having the highest risk.
Norway plays a key energy supply role in this crisis. Equinor's Mongstad refinery, located north of Bergen, processes crude oil entirely from the North Sea, without passing through the Strait of Hormuz. This refinery has an annual processing capacity of 12 million tons, with total oil product output four times Norway's domestic demand, largely exported to the European market.
According to E24, Norway's largest financial media, Minister of Trade and Industry Cecilie Myrseth stated that Mongstad has increased aviation fuel production, ensuring sufficient domestic supply.
Finnair also performed steadily. According to Finnair's first-quarter financial report, losses significantly narrowed, and revenue grew by over 10%. CEO Turkka Kuusisto guaranteed stable aviation fuel supply in Helsinki and an 80% hedging ratio, urging travelers to book summer tickets with peace of mind.
Finnair's stable access to aviation fuel is primarily due to Neste, a Finnish energy company, whose Porvoo refinery, one of the largest refining centers in Northern Europe, also uses North Sea crude oil, playing a crucial role. Furthermore, Neste, as the world's largest producer of Sustainable Aviation Fuel (SAF), continues to expand its aviation fuel supply chain layout in Europe.
According to CNBC, analysts at Societe Generale pointed out that while hedging can solve the 'problems solvable by money' of price surges, facing a physical shortage of oil will evolve into a different challenge concerning the industry's survival. (Editor: Wei Shu) 1150504
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(Central News Agency reporter Wu Chi-lin, Helsinki, May 4th exclusive report) An oil crisis is sweeping through Europe, leading to a divergence in the fate of the aviation industry. The International Energy Agency (IEA) recently warned that Europe could run out of aviation fuel within six weeks, leading Lufthansa and SAS to significantly cut flights; in contrast, low-cost giants Ryanair and Finnair, which adopted hedging strategies in advance, have successfully weathered the initial impact.
Since the US-Israel coalition began its war against Iran on February 28th, Iran's subsequent blockade of the Strait of Hormuz has hindered European aviation fuel imports. Oil prices have surged from approximately $90 per barrel at the beginning of the year to nearly $190, more than doubling.
According to Aerospace Global News, IEA Executive Director Fatih Birol warned that if the disruption to oil supply continues, Europe's aviation fuel reserves could 'run out in as little as six weeks.'
According to an official statement from Lufthansa Group, Lufthansa canceled up to 20,000 short-haul flights starting April 20th, estimated to save over 40,000 tons of aviation fuel, but also permanently suspending many European regional routes.
SAS followed suit, cutting over a thousand flights in April; KLM also announced the reduction of 160 European flights.
According to Aerotime, an aviation information platform, SAS, the largest airline in Northern Europe, adjusted its strategy in 2025, entering 2026 with zero aviation fuel hedging, buying every barrel spot, leaving no buffer.
After cutting flights, SAS directly increased ticket prices, passing the cost onto passengers, and conceding market share. Reuters reported that competitor Norwegian Air seized the opportunity, adding 120 flights to absorb passengers abandoned by SAS. Analysts estimate this wave of impact will erode hundreds of millions of euros from SAS's profits.
In contrast, operators with high hedging ratios faced less pressure. Ryanair CEO Michael O'Leary stated in an interview with US financial media CNBC that the media has over-exaggerated the aviation fuel crisis.
O'Leary stated that Ryanair has hedged 80% of its aviation fuel demand at an average price of about $67 per barrel, with contracts extending until March 2027. He emphasized: "We are the most hedged and resilient airline in Europe." He also warned that if high oil prices continue into the third quarter, "there will be airline bankruptcies in Europe," specifically naming Hungarian low-cost airline Wizz Air and Air Baltic as having the highest risk.
Norway plays a key energy supply role in this crisis. Equinor's Mongstad refinery, located north of Bergen, processes crude oil entirely from the North Sea, without passing through the Strait of Hormuz. This refinery has an annual processing capacity of 12 million tons, with total oil product output four times Norway's domestic demand, largely exported to the European market.
According to E24, Norway's largest financial media, Minister of Trade and Industry Cecilie Myrseth stated that Mongstad has increased aviation fuel production, ensuring sufficient domestic supply.
Finnair also performed steadily. According to Finnair's first-quarter financial report, losses significantly narrowed, and revenue grew by over 10%. CEO Turkka Kuusisto guaranteed stable aviation fuel supply in Helsinki and an 80% hedging ratio, urging travelers to book summer tickets with peace of mind.
Finnair's stable access to aviation fuel is primarily due to Neste, a Finnish energy company, whose Porvoo refinery, one of the largest refining centers in Northern Europe, also uses North Sea crude oil, playing a crucial role. Furthermore, Neste, as the world's largest producer of Sustainable Aviation Fuel (SAF), continues to expand its aviation fuel supply chain layout in Europe.
According to CNBC, analysts at Societe Generale pointed out that while hedging can solve the 'problems solvable by money' of price surges, facing a physical shortage of oil will evolve into a different challenge concerning the industry's survival. (Editor: Wei Shu) 1150504
Choose to stand with facts, every sponsorship you make is a force to protect press freedom.
Download the Central News Agency's "First-hand News" APP to grasp the latest information instantly.
The text, pictures, and videos on this website may not be reproduced, publicly broadcast, publicly transmitted, or utilized without authorization.