Ryanair, the largest European airline, has warned of a “significant” increase in airfares on short-haul flights across Europe next year if oil prices remain at their current high levels. In response, the carrier has already begun cutting back its winter flight schedule to reduce losses in the coming months and lessen its reliance on unhedged jet fuel prices. Amid the conflict in the Middle East and the crisis in the Strait of Hormuz, its cost has already reached $140 per barrel, Financial Times reports.
According to IATA data, last week the average global price of aviation fuel was $156.85 per barrel.
Details
If oil prices don’t fall, short-haul—short—flight fares in Europe will go up next year, and “some airlines with lower fuel hedging volumes will find it difficult to maintain passenger volumes or even survive,” Ryanair warned.
Ryanair itself is protected better than many market players, MarketWatch writes: the carrier hedged 80% of its jet fuel needs until March. However, the remaining 20% has to be purchased at current market prices of $140 per barrel, making some routes unprofitable. To reduce seasonal losses from about €170 million to about €100 million, the airline is trimming its winter schedule (from November to March) and at the same time lowering its passenger traffic forecast for the next 12 months—from 216 million to 214 million people.
The aviation industry, including Ryanair, is under pressure due to higher aviation fuel costs after the war began in the Middle East at the end of February. Since no peace deal between the U.S. and Iran was ever reached and the crisis in the Strait of Hormuz continues, the upcoming winter season for the aviation industry, FT says, will be difficult. The newspaper expects that some airlines will cut back capacity to save money. Earlier this summer, IAG, which owns British Airways and low-cost carrier Vueling, had already dropped any plans to increase capacity during the year because of constantly rising oil prices, and Wizz Air said that passenger traffic growth in August was slower than in July.
Ryanair shares on trading in Dublin rose by 1% amid reports of a reduction in the number of winter flights; since the start of the year, they have been down more than 22%.
Why this matters
About the risks in the oil products market, commodities market expert and senior adviser at Carlyle Group Jeff Currie warned investors a few weeks earlier. In an interview with CNBC on August 18, he emphasized: “Nobody on the planet consumes crude oil except refineries. Everyone else consumes gasoline, diesel, and jet fuel, and those markets look significantly worse” (quote from MarketWatch).
The situation is worsened by the fact that talks between the U.S. and Iran regarding the Strait of Hormuz have stalled, MarketWatch notes. The head of trading at One Delta at Goldman Sachs, Rich Privorotskiy, said that previous oil price spikes were smoothed out by “interventions, diplomacy, or attempts to knock down prices.” This time, the U.S. moved toward escalation, striking Iranian facilities “at a time when oil was already rising—during market hours.”
Privorotskiy warned: even if the conflict de-escalates, crude oil is “only part of the problem, since prices for distillates, gasoil, diesel, and European natural gas have already broken higher,” MarketWatch adds.
What about the oil and fuel market
In trading on September 2, Brent futures are trading around $95 per barrel. WTI is around $91.
Before the start of the U.S.-Iran conflict, the average cost of aviation fuel in the fourth quarter of 2025 was about $91 per barrel, according to IATA data. After the outbreak of hostilities, prices surged sharply, reaching a spring peak of over $230 per barrel. By now, the quotes have pulled back from the peak levels, but they are still significantly higher than the pre-war level.ㅤ
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