Ryanair has shed more than a third of its profit as rising jet fuel prices triggered by the US-Israel war with Iran begin to bite, undercutting the budget airline’s earlier hedging strategy.
The carrier had previously insulated itself from higher energy costs by fixing prices on hedged contracts, but said the cost of the 20 per cent of its jet fuel that remained unhedged was now rising rapidly. The warning came as UK motorists also faced a fresh squeeze at the pump, with petrol and diesel prices climbing again after the collapse of peace talks to end the conflict.
“Ryanair loses over a third of profit as jet fuel costs rise, while UK petrol prices climb again after peace talks collapse.”
When the war began on 28 February, fuel prices surged as fighting severely disrupted the production and transportation of energy across the Middle East. Brent crude – the global benchmark for wholesale oil prices – jumped from about $70 a barrel before the conflict to above $120 at its peak. Prices then nosedived in early July after the US and Iran agreed a framework deal to end the fighting, falling back to near $70.
But after the peace talks collapsed, tensions resurfaced and Brent has climbed back to around $87 a barrel. Analysts say every $10 (£7.53) increase in the oil price pushes up pump prices by roughly 7p a litre. According to the RAC, the average price of petrol reached an Iran war peak of 159.53p a litre on 28 May, while diesel hit 191.54p on 15 April. In early July, petrol sank to 150.50p and diesel to 164.52p. Since then they have been rising, with petrol now costing 152.54p a litre and diesel 167p, according to the motoring firm’s latest data.
Simon Williams, the RAC’s head of policy, said “the increases are likely to keep coming thick and fast” because of the jump in the Brent crude price. Because transporting oil is a slow process, price movements in wholesale markets take about a fortnight to show at the pump.
Despite the conflict, petrol and diesel prices remain below the levels reached in summer 2022 following Russia’s invasion of Ukraine, when petrol hit 191.5p a litre and diesel 199p. Fuel retailers have denied accusations of price gouging, and the official markets regulator said it had “not seen evidence of retailers actively changing their pricing strategies to take advantage of the crisis”.
A government scheme called Fuel Finder allows drivers to compare petrol station prices across the UK. Luke Bosdet, head of policy at the AA, said the group had been surprised at the speed prices had fallen and put it down to the scheme. On 20 May, Prime Minister Sir Keir Starmer said a planned 5p increase in fuel duty due in September would be postponed until 31 December because of the conflict.
For Ryanair, the profit tumble marks the first major impact of the Iran war on a UK-facing airline, and with Brent crude still volatile, the pressure on both airlines and motorists shows no sign of easing.