DublinRyanair locked 80% of its fuel pre-Hormuz.
The remaining 20% now tracks Brent’s Hormuz risk premium — O’Leary said the same cost hits every European carrier regardless of routes.
Summer fare guidance cut to “broadly flat”; the airline withheld a full-year profit outlook.
Sources: Manchester Evening News, Mirror, The Independent
WHY AIRLINES HEDGE
Fuel is 25-30% of an airline's operating cost — the single largest variable expense. A $10/barrel move in Brent shifts annual fuel spend by hundreds of millions for a carrier the size of Ryanair. Hedging locks forward prices via swaps or collars, trading upside for predictability.
THE CRACK SPREAD
Jet fuel is not Brent. It's a refined product, and its price is Brent plus the 'crack spread' — the refining margin. When Hormuz risk spikes, the crack widens faster than crude itself because refineries near the Gulf supply much of Europe's jet.
WHO CAN'T HEDGE
Hedging requires investment-grade credit. Counterparties demand collateral or a strong balance sheet before writing a 12-month fuel swap. Carriers in financial distress — most of the Gulf-exposed African and South Asian airlines — pay spot prices and absorb every spike directly.
THE HORMUZ PASS-THROUGH
One-fifth of global oil and roughly a quarter of LNG transits the Strait. Iran's coastline runs the entire northern edge; the deep channel hugs the Iranian side. A risk premium appears in Brent within hours of any escalation, and there is no overland pipeline route that can replace seaborne Gulf volumes at scale.
THE 1980s PRECEDENT
During the 1984-88 Tanker War, Iran and Iraq hit over 400 commercial vessels in the Gulf. Oil spiked, then markets adapted: tankers reflagged under US and Kuwaiti flags, warships escorted convoys, and insurance rates settled at a new — higher — baseline. The disruption was real, but containable, and that's the historical pattern markets price.
WHY FARES MOVE SLOWLY
European short-haul fares are set months ahead via yield-management systems. A fuel spike today shows up in pricing for next summer's flights, not tomorrow's. This is why O'Leary's guidance of 'broadly flat' fares signals the hedge held — if it hadn't, summer 2026 prices would already be visibly higher.