European Airlines Hedge Against Rising Jet Fuel Prices Amid Middle East Oil Surge

Higher oil prices in the Middle East are increasing jet fuel prices, which account for a significant portion of airlines' costs. Brent crude oil nearly hit $94 per barrel shortly after the Hamas attack in Israel on October 7, but has since eased to around $84. 


Spot Northwest European jet fuel prices were at $914 per metric ton, or around $116 per barrel, on Thursday. Some airlines use futures and options to hedge against price increases and value changes in the U.S. dollar, in which jet fuel is priced. European airlines are hedged heading into 2024, with AIR France-KLM, Easyjet, Finnair, IAG, Icelandair, Lufthansa, Norwegian Air, Ryanair, SAS, and WIZZ AIR. AIR France-KLM has hedged 70% of its jet fuel consumption for the fourth quarter of 2023 and 64% for the first quarter of 2024, for $129.87 and $123.80 per barrel, respectively. 

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Easyjet has hedged 76% of its fuel needs for the first half of 2024 and 51% for the second, at an average cost of $109.75 and $104.18 per barrel, respectively. Finnair has covered 159,000 tons of fuel for the first quarter at an average price of $116.20 per barrel, 126,000 tons for the second at $109.87 per barrel, and 87,000 tons for the third at $118.23 per barrel. 

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IAG, the owner of British Airways and Iberia, was 58% hedged for the first quarter, 49% for the second, 39% for the third, and 32% for the fourth quarter of 2024. Icelandair has hedged 26% of second-quarter usage at 26,500 tons for $106.33 per barrel, and 5% of third-quarter usage at 7,000 tons for $106.58 per barrel. Lufthansa has hedged 74% of the fuel it expects to need for 2024 at an average price of $120.38 per barrel.

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