European Union Warns of Jet Fuel Supply Issues Amid Ongoing Conflict with Iran

The European Union has issued a warning regarding potential impacts on airlines due to the ongoing conflict involving the U.S. and Iran, particularly if the blockade of the Strait of Hormuz persists. The European Commission stated that while fuel markets have so far managed the situation through increased prices, this could change if conditions do not improve. Oil prices have risen since the conflict began over three months ago, affecting crude oil and petroleum products across EU countries. The Commission noted that while there have been no physical supply disruptions at the consumer level yet, tighter markets for jet fuel are anticipated if the situation continues to deteriorate. Jet fuel prices in northern Europe reached a peak of $1,904 per tonne in early April, more than double the prewar price, and were trading around $1,328 per tonne last week. Despite concerns, oil refiners believe Europe may avoid outright jet fuel shortages this summer, although the peak travel season may test the supply chain. The future of the market depends on ongoing negotiations between the U.S. and Iran, with reports of a tentative agreement to end hostilities and reopen the Strait of Hormuz. However, the negotiations remain fragile amid recent military exchanges. Treasury Secretary Scott Bessent indicated that the U.S. has specific conditions that must be met for negotiations to progress, including Iran's agreement to halt its nuclear program.