British businesses face a summer of soaring travel costs and disrupted supply chains as the United Kingdom emerges as the European economy most vulnerable to a deepening jet fuel crisis triggered by the prolonged closure of the Strait of Hormuz, according to a stark new assessment from Goldman Sachs.
The Wall Street investment bank has warned that commercial fuel inventories in Britain could fall to “critically low levels” within weeks, raising the prospect of formal rationing measures that would squeeze airlines, freight operators and the thousands of SMEs that depend on reliable air links to trade with overseas markets.
Goldman’s analysts pulled no punches in their note to clients, identifying the UK as “most exposed” among European nations because of three compounding weaknesses: depleted stockpiles, an unusually high dependence on imported fuel, and a domestic refining base that has been hollowed out over recent years. “The UK is the largest net importer of jet fuel in Europe, and it holds no strategic reserves, leaving commercial inventories as the primary buffer,” the bank concluded.
The numbers paint a sobering picture for owner-managed firms whose order books rely on the speed and reliability of British aviation. Jet fuel prices have doubled since hostilities erupted on 28 February, while carriers worldwide have stripped some two million seats from this month’s schedules in the past fortnight alone. With fuel accounting for up to a quarter of an airline’s operating costs, those increases are now flowing directly into ticket prices and freight rates.
IAG, the FTSE 100 parent of British Airways, has confirmed it will pass higher fuel costs through to passengers, conceding that its hedging programme has left it “not immune” to the volatility. Air France is bracing for a $2.4 billion increase in its annual fuel bill; American Airlines anticipates an additional $4 billion. Both have signalled fare rises and a paring back of passenger perks.
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