British businesses are facing rising travel costs and disrupted supply chains over the summer as the United Kingdom has emerged as the European economy most vulnerable to a deepening jet fuel crisis caused by the prolonged closure of the Strait of Hormuz, according to a new assessment from Goldman Sachs.
A Wall Street investment bank has warned that commercial fuel stocks in Britain could fall to “critically low levels” within weeks, raising the possibility of formal rationing measures that would squeeze airlines, freight operators and thousands of SMEs that rely on reliable air links to trade with overseas markets.
Goldman analysts pulled no punches in their note to clients, identifying Britain as the “most exposed” among European countries due to three compound weaknesses: low reserves, an unusually high reliance on imported fuel, and a domestic refining base that has hollowed out in recent years. “The UK is the largest net importer of jet fuel in Europe, and has no strategic reserves, leaving commercial inventories as the primary buffer,” the bank concluded.
These numbers paint a grim picture for owner-managed firms whose order books depend on the speed and reliability of British aviation. Jet fuel prices have doubled since hostilities erupted on February 28, while airlines around the world have removed nearly 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, this increase is now flowing directly into ticket prices and freight rates.
British Airways’ FTSE 100 parent, IAG, has confirmed it will pass on higher fuel costs to passengers, admitting its hedging program left it “not immune” to volatility. Air France is set for a $2.4 billion increase in its annual fuel bill; American Airlines is projected to make an additional $4 billion. Both have indicated increasing fares and cutting passenger facilities.
For UK PLC, the impact extends far beyond the holiday season. Ryanair Chief Executive Michael O’Leary told reporters on Friday that the European rival was “desperately” looking for flights and would start doing so within weeks. Meanwhile, fuel providers have warned airlines that Britain has the “most limited visibility” in Europe over future supplies, a direct result of its heavy reliance on Middle Eastern imports.
The Prime Minister, Sir Keir Starmer, admitted last week that holidaymakers may need to “rethink where to go on holidays” – an unusually frank admission that has done little to reassure the travel trade or SME exporters who use the belly-hold capacity of passenger flights to move time-sensitive goods to Europe and beyond.
Government ministers have publicly insisted that Britain can source fuel from alternative markets, but Goldman’s analysis highlights the structural weakness behind that confidence. The closure of Scotland’s only oil refinery, Grangemouth, in April 2025 removes meaningful domestic capacity from the system. Question marks also hang over the Prax Lindsey refinery in north Lincolnshire, although its new owner, US energy major Phillips 66, has insisted its acquisition will strengthen the UK’s fuel security.
Adding to the structural criticism, a Tony Blair Institute report published this week argues that Europe’s tendency to frame energy policy primarily through a climate lens has left the continent paying two to three times more for electricity than its global rivals, as well as deepening dependence on imports, exactly the dependence that is now so painfully exposed.
Brussels is struggling to respond. The European Commission confirmed on Monday that it will issue formal guidance on jet fuel to airlines later this week. “I don’t think anyone knows how long this situation will last,” Commission spokeswoman Anna-Kaisa Itkonen told reporters, “so the best we can do and the most effective thing we can do and what we are doing is to prepare for all scenarios.”
The Gulf region accounts for about one-fifth of jet fuel trade in international markets and Europe is one of its largest customers. With the Strait of Hormuz effectively closed, carriers across the continent are now bidding against each other for cargo from Asia and the United States, and prices are rising accordingly.
Fuel suppliers have indicated that May should remain manageable, but have flagged “the potential onset of disruptions from mid to late June” if the Strait does not reopen, a timeline that puts the peak summer trade window for hospitality, travel and export-led SMEs in the danger zone.
For the army of British small businesses whose growth plans assume cheap, plentiful air connectivity, from boutique tour operators and food exporters to professional service firms with European clients, the City’s message is uncomfortably clear: prepare for higher costs, longer delays and the real possibility that, for the first time in a generation, jet fuel in Britain may have to be rationed.
jamie young
Jamie is a senior reporter at Business Matters, with over a decade of experience in UK SME business reporting. Jamie has a degree in Business Administration and regularly attends industry conferences and workshops. When Jamie is not reporting on the latest business developments, he is passionate about mentoring budding journalists and entrepreneurs to inspire the next generation of business leaders.
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