Lufthansa warns of potential fuel shortage on prolonged Iran war

Deutsche Lufthansa AG sees potential bottlenecks for jet fuel availability should the conflict in the Middle East turn into a longer war.

“Availability is already difficult at some airports in Asia,” Grazia Vittadini, who heads up Lufthansa’s technology, IT and innovation division, told German newspaper Die Welt. “The longer the Strait of Hormuz is blocked, the more critical the supply situation can become.”

Europe’s biggest aviation group last week readied plans including potentially grounding planes in case demand drops and fuel prices escalate as hostilities drag on. The effective closure of the Strait of Hormuz has stranded a significant proportion of global jet fuel shipments and led refineries in Asia to cut production. 

While prices of kerosene have as much as doubled, Lufthansa is mostly protected via hedges that cover 80% of the airline’s fuel needs this year, said Vittadini. 

“But certainly, the rising kerosene prices impact us too,” she said.

Europe is the main importer of jet fuel — including kerosene — from the Persian Gulf, with supplies from that region accounting for about half of European Union and UK imports, according to Vortexa data compiled by Bloomberg News.