Tallinn Airport jet fuel supply unaffected by international jet fuel crisis
Aviation fuel supplies at Tallinn Airport are currently not impacted by the Europe-wide crisis which has seen fuel prices rise by as much as 50 percent.
The International Energy Agency (IEA) said just before the weekend that Europe potentially has just six weeks' worth of jet fuel in reserves, as a result of the conflict in the Middle East.
While the Norwegian government announced Monday its fuel reserves have fallen – Tallinn Airport buys its aviation fuel from Norway – this is purchased from the private sector rather than the state, while the fuel is refined at a facility in Lithuania. The supplier, Polish company Orlen, has promised to fulfill all contracts through the end of this year.
A more immediate likely effect of the crisis is rising air fares.
While airlines cannot change the prices of tickets already purchased for scheduled flights, new tickets are already getting more expensive, and tickets purchased as part of a package tour may get costlier even if already bought.
"Competition between airlines in Europe is highly intense, so prices cannot rise very much, but depending on the carrier and the ticket class, prices may rise by 10-30 percent. Tallinn had been anticipating very strong growth for this summer season, with flights up by 17 percent, which means that by May we are already seeing that 5 percent of those flights have been withdrawn," Tallinn Airport board member Eero Pärgmäe told "Aktuaalne kaamera."
Tickets purchased earlier through tour operators may also rise in price, by as much as 8 percent, regardless of whether the tour operator made use of a charter flight or a scheduled flight for the package in question.
"According to the contract, a tour operator can have the right to charge a fuel surcharge based on the final fuel price at the time of the flight. If we are talking about Egypt, those are flights of more than five hours; if we are talking about the Canary Islands, more than six hours. That uses up quite a lot of fuel, but fuel prices have increased by 50 percent, which unfortunately is ultimately reflected in the price paid by the consumer," aviation expert Sven Kukemelk said.
How long the jet fuel crisis will last depends on developments in the Strait of Hormuz, through which around 40 percent of the world's crude oil had passed before the crisis; this situation is itself hard to predict in terms of when it might end.
Peeter Luikmel, head of the foreign economy division at the Bank of Estonia (Eesti Pank), said the longer the strait stays closed, the costlier prices are likely to be, as Europe will need to seek alternative supply routes.
Around half, or even ultimately three quarters, of the current shortfall can be covered by U.S. supply, Luikmel said, and there is some cause for optimism despite the situation.
"Given the scale of the crisis, financial markets are nevertheless relatively optimistic. It is possible to agree on oil and fuel prices for the second half of 2027 at levels significantly lower than today's prices," Luikmel said.
Background:
Jet fuel prices in Europe hit a record $1,838 (€1,560) per tonne, up from $831 (€705) before the conflict, the BBC reported; fuel typically makes up 20–40 percent of airline operating costs.
Europe may have only about six weeks of jet fuel remaining, according to the International Energy Agency (IEA).
The Strait of Hormuz has been effectively closed for over six weeks both from the inside and outside, following the U.S. and Israeli strikes. As with oil more broadly, the disruption has caused jet fuel prices to surge and raised fears of shortages.
Europe has "maybe six weeks of jet fuel left", the head of the IEA. The agency warned stocks could hit a tipping point in June if less than 50 percent of Middle Eastern imports are replaced, while the IEA warned flight cancellations may occur soon if supply issues persist.
Refineries in Korea, India, and China depend heavily on Middle Eastern crude oil, and Europe more widely has historically relied on the Middle East for around 75 percent of its jet fuel imports, the BBC reported.
Dutch carrier KLM has already said it plans to cancel 160 European flights due to rising costs, even ahead of any actual shortage kicking in.
--
Editor: Andrew Whyte, Marko Tooming
Source: 'Aktuaalne kaamera'
