Grounded-Jet Fuel

The Jet Fuel Crisis

"Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases."

- Ray Dalio, Principles: Life and Work

Third order consequence

We are now watching the third-order consequences of the Hormuz closure arrive in real time. The first order was military blockade. The second order was energy shortage. The third is economic, and it is landing in departure boards, hotel bookings, and GDP forecasts across every continent.

It is 100% unavoidable. Airlines globally are pairing significant numbers of flights from their rosters due to the scarcity of jet fuel. The Straits of Hormuz ‘SOH’ accounted for 40% of Europe’s jet fuel imports. Zero jet fuel has passed through the Strait since February 28. That is 50 days.

The US has ramped jet fuel exports to Europe to roughly 150,000 barrels per day, six times the normal level. It is not enough. IEA Director Fatih Birol told the Associated Press on April 17 that Europe has “maybe six weeks” of jet fuel remaining and called this “the largest energy crisis we have ever faced.” CNN reported Sunday that even if a deal to reopen SOH were signed today, “the die is cast for summer travel.”