Cruise lines have been hit by rising fuel costs as the war in Iran raises oil prices
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Cruise lines look up as they rise oil prices have pushed their fuel costs amid the Iran war, as analysts warn that Carnival could see a big hit to its profits in 2026.
Oil prices have increased more than 35% since war with Iran it started during attacks on oil and transport facilities and threats to oil tankers and other ships passing through the Strait of Hormuz.
West Texas Intermediate crude prices have risen above $90 a barrel in recent days, while Brent crude was just over $100 a barrel during that time. Those prices were between $60 and $70 a barrel last month before the conflict began.
Cruise lines depend on heavy oil and offshore gas and often try to hedge oil price volatility with financial contracts, although Carnival Corp. it is different from that practice.
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Cruise lines are facing higher fuel costs due to the war in Iran causing oil prices to rise. (Joe Raedle/Getty Images)
10% change. fuel costs each metric ton could reduce Carnival’s 2026 total revenue by $156 million, compared to $57 million for rival Royal Caribbean, according to recent business filings.
Norwegian Cruise Line said it had not revised its fuel hedges in its earnings report in early March, when it indicated the 10% change would reduce full-year earnings per share by 7 cents. That would equate to a drop of about $90 million in revenue, according to calculations by Morningstar Research.
The world economy experienced an energy price shock in 2022 there Russia invaded Ukraine. That year, Carnival’s fuel costs were 17.7% of total revenue, compared to 12.1% for Royal Caribbean and 14.2% for Norwegian.
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| A ticker | Security | Finally | Change | Change % |
|---|---|---|---|---|
| CCL | Company CARNIVAL CORP. | 24.71 | +0.72 |
+3.02% |
| RCL | ROYAL CARIBBEAN GROUP | 280.81 | +8.21 |
+3.01% |
| NCLH | NORWEGIAN CRUISE LINE HOLDINGS LTD. | 19.84 | +0.96 |
+5.08% |
CFRA analyst Alex Fasciano noted that Carnival “has a larger fleet, which means the level of consumption is higher than its counterparts.”
Carnival told Reuters in a statement that “a cruise line’s best hedge against fuel costs is to use less fuel, so we focus on using less fuel in the first place.”
“We have reduced our fuel consumption by 18% since 2011 even though energy has increased by about 38% in that time,” added Carnival, noting that it sees no long-term benefit from heating.
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Carnival does not limit its fuel prices and instead focuses on reducing consumption. (Photos by Gerard Bottino/SOPA/LightRocket via Getty Images)
Cruise lines they face oil price volatility during the industry’s busiest booking period, known as the “wave season,” which runs between January and March and often sees operators offer special deals and discounts on cruises this year.
These boats are usually active in the third quarter and are a disproportionately large contributor to the earnings of the boat operators, according to Lizzie Dove, an analyst at Goldman Sachs.
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Dove noted that the oil shock could affect Americans booking to Europe, especially at higher prices transatlantic voyage.
Reuters contributed to this report.
