Goldman Sachs Warns of Rating Risk for British Businesses

British businesses are facing a summer of rising travel costs and supply disruptions as the United Kingdom emerges as the European economy most vulnerable to the jet fuel crisis caused by the prolonged closure of the Strait of Hormuz, according to new research from Goldman Sachs.

A Wall Street investment bank has warned that commercial fuel prices in Britain could fall to “significantly low levels” within weeks, raising the prospect of legal measures to pressure airlines, cargo operators and thousands of SMEs that depend on reliable air links to trade with overseas markets.

Goldman’s analysts did not say anything to their clients, identifying the UK as “the most exposed” among European nations due to a combination of three weaknesses: the stock market, an unusually high dependence on imported fuel, and a domestic refinery that has been neglected in recent years. “The UK is the largest importer of jet fuel in Europe, and has no strategic reserves, leaving commercial stocks as the main source,” the bank concluded.

The numbers paint a sobering picture of the companies whose order books depend on the speed and reliability of British aircraft. Jet fuel prices have doubled since the war broke out on February 28, while carriers around the world have stripped nearly two million seats from this month’s schedules in the past two months. As fuel is factored into the airline’s operating costs, those increases are now directly reflected in ticket prices and baggage allowances.

IAG, the FTSE 100 parent of British Airways, has confirmed it will pass on higher fuel costs to passengers, admitting its safeguards have left it “vulnerable” to volatility. Air France is looking at a $2.4 billion increase in annual fuel costs; American Airlines expects another $4 billion in cash. Both showed a rise in fares and a decline in passenger benefits.

For UK plc, the results extend beyond the festive season. Michael O’Leary, Ryanair’s chief executive, told reporters on Friday that European rivals were “desperately chasing” flights to the country and would start doing so in a few weeks. Fuel suppliers, meanwhile, have warned airlines that Britain has “very limited visibility” in Europe for future supplies, a direct result of its heavy reliance on Middle Eastern exports.

The Prime Minister, Sir Keir Starmer, last week admitted that tourists may need to rethink “where they go on holiday” – an apparently rare admission that has done little to boost the tourism trade or SME traders who use the capacity to hold passenger jets to move time-consuming goods to Europe and beyond.

Government ministers have insisted publicly that Britain can get fuel from other markets, but Goldman’s analysis reveals structural weaknesses behind that confidence. The closure of Grangemouth, Scotland’s only refinery, in April 2025 deprived the system of significant domestic capacity. Question marks also hang over the Prax Lindsey refinery in North Lincolnshire, although its new owner, US energy giant Phillips 66, has insisted the purchase will strengthen the UK’s fuel security.

Adding to the criticism of the structure, a report from the Tony Blair Institute published this week says that Europe’s tendency to frame energy policy mainly through a climate lens has left the continent paying two or three times more for energy than its global competitors, while at the same time deepening its reliance on imports, and a dependency that is so painfully exposed.

Brussels is trying to respond. The European Commission confirmed on Monday that it will issue official guidelines on jet fuel 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 efficient thing we can do and are doing is to prepare for all the things that will happen.”

The Gulf region accounts for about one-fifth of jet fuel sold on international markets, and Europe is among its biggest customers. With the Strait of Hormuz effectively closed, carriers across the continent are now calling each other for cargo from Asia and the United States, and prices are rising accordingly.

Fuel suppliers indicated that May should remain manageable but flagged “mid-June as a possible start of disruption” if the flow is not reopened, a timeline that puts the peak summer trading window for hospitality, tourism and export-led SMEs equally at risk.

For a group of small British businesses whose plans for growth are taking cheap, multi-air connections, from retail tour operators and food exporters to professional services firms with European clients, the message from the City is painfully clear: prepare for high costs, long delays, and the very real possibility that, for the first time in a generation, British aviation may have to limit fuel.