Lufthansa just yanked 20,000 flights from its summer schedule to save jet fuel, the level of disruption Europe is now planning around. The Strait of Hormuz has been effectively closed since the Iran war started Feb. 28, cutting off the 360,000 barrels of jet fuel a day that used to flow through it.
That's the gap Europe is now trying to fill, and the bidding is getting brutal.
European airlines are trying to fill the gap with imports from the US and Nigeria, but every other big buyer is doing the same thing.
"We have to fight for every cargo that's going to come," Argus head of European product pricing Benedict George told CNBC, adding that Europe is competing "against Singapore, against Australia - and the price...just goes higher and higher."
US jet fuel exports hit a record 442,000 barrels a day in early April, about 200,000 barrels above the five-year average. Europe used to take 30,000 to 60,000 barrels a day from the US, and that flow has surged to about 200,000.
Even with the new US supply, Europe is still short about 175,000 barrels a day versus normal flows from the Middle East.
Higher fuel prices airlines can pass on, and higher fares are annoying but manageable. The risk Societe Generale flagged this week is the harder one - actually running out of fuel.
"Paying more for energy is manageable; not having it is existential," the bank's analysts wrote in a note this week.
That math is showing up in airline behavior. Lufthansa cancelled 20,000 flights last week, freeing up more than 40,000 metric tons of jet fuel, and Air France-KLM raised long-haul economy fares by €100 and US, Canada and Mexico fares by €70.
EasyJet promised no surcharges on already-booked summer flights, and the IEA warned earlier this month that Europe could run out of jet fuel in weeks.
Airlines that locked in fuel prices before the war are sitting much better than the ones that didn't.
Lufthansa is hedged at about 80% of its 2026 needs at pre-crisis prices, and Ryanair's full-year hedge is around 80% too. Wizz Air is at 70% for the summer, and Morningstar flagged Wizz Air as having the lowest fuel margin buffer of the major European listed carriers.
IAG, the parent of British Airways, said it isn't seeing supply problems but called the price hit unavoidable. The company asked European governments for "flexibility...including on slot alleviation" so airlines can keep flying.
Wizz Air CEO József Váradi said the carrier still plans to grow its summer schedule by 17%, and he doesn't expect Wizz to run out of jet fuel. The optimism contrasts with Lufthansa's 20,000-flight cull and underscores how differently each airline is reading the same supply picture.
Whether the Strait of Hormuz reopens and US exports stay at record levels. Whether unhedged carriers can keep planes in the air through the summer.
The IEA's warning about running out of fuel is the line investors should anchor on. The fuel is still flowing - just not enough of it.
