Lufthansa Warns Strait of Hormuz Closure Will Add $2 Billion in Fuel Costs

Lufthansa Group expects the surge in jet fuel prices to cost it an additional $2 billion this year as the closure of the Strait of Hormuz “is leading to a shortage in kerosene supply and thus to a significant increase in kerosene prices,” Europe’s biggest airline said on Wednesday.

Lufthansa expects strong summer travel numbers, but it warned that “At the same time, the current closure of the Strait of Hormuz is leading to a shortage in kerosene supply and thus to a significant increase in kerosene prices.”

The war in Iran and the closure of the Strait of Hormuz have severely constrained Europe’s jet fuel supply, while jet fuel prices have spiked to over $200 per barrel.

The war in Iran has cut most of Europe’s imports of jet fuel, while local output has been falling for nearly two decades due to dozens of refineries closing permanently or being converted to biofuel production.

Despite the fact that the airline group has hedged about 80% of fuel costs for 2026, the spike in jet fuel prices “places a substantial burden on the cost base of Lufthansa Group airlines,” it said.

As of current estimates, the kerosene price surge would lead to additional costs of 1.7 billion euros, or $2 billion, in 2026, Lufthansa said.

“While no restrictions in kerosene supply are currently expected at any of the Lufthansa Group hubs, potentially reduced fuel availability later in the year represents an additional risk factor,” the airline said.

Till Streichert, chief financial officer of Deutsche Lufthansa AG, warned “Our annual profit will likely be lower than originally anticipated.”

Lufthansa last month said it would remove a total of 20,000 short-haul flights from its European summer schedule. A week earlier, Lufthansa had said it was accelerating plans to reduce its flight program and retire some aircraft earlier “In view of significantly increased kerosene prices, which have more than doubled compared to the period before the Iran war, as well as rising additional burdens from labor disputes.”

By Michael Kern for Oilprice.com

More Top Reads From Oilprice.com