Saga warns of cruise fuel shortage risk

Over-50s group Saga has warned that fuel shortages could pose a threat to its cruise holidays as the war in Iran squeezes global oil supplies.

In its annual report published on Tuesday, the holidays and insurance giant acknowledged that it was “directly exposed” to potential issues with the supply of marine fuel.

Bosses said the company was also indirectly affected by rising jet fuel prices because of its partnerships with airlines.

The outbreak of war in Iran and closure of the Strait of Hormuz has triggered a surge in oil prices and prompted fears of shortages. A fifth of the world’s oil and gas passed through the crucial trade artery before the war.

The price of oil rose back above $100 a barrel on Monday after the US launched fresh strikes on Iran, fuelling fears about the fragile ceasefire and the prospect of a peace agreement.

Analysts have also warned that emergency oil stockpiles – which have helped to plug the gap in production – are running “critically low”.

Saga said it had fully hedged its exposure to rising commodity prices in the year ahead. The company added that it had explored ways to reduce its marine fuel consumption in recent years by allowing its ships’ engines to be turned off when in port and rolling out biofuel trials on its ocean fleet.

Shipping companies have also had to wrestle with the threat of unscrupulous fuel suppliers flooding the market with tainted oil in an effort to cut costs.

There has been a sharp uptick in incidents of tankers breaking down in recent weeks, which experts have blamed on marine fuel cut with impure shale oil.

The tainted blend can lead to “sludging”, where fuel becomes more viscous. This can clog engines and cause them to stutter or even grind to a halt.

Saga insisted earlier this year that the war in the Middle East had not hit its cruises after some rival travel providers were forced to divert sailings to avoid disruption in the region.

The FTSE 250 company said none of its cruise itineraries had been affected by the war in Iran, adding that it had “minimal exposure to the region”. It said it only offered a small number of Saga holidays in Egypt, Cyprus and Turkey.

Mike Hazell, Saga’s chief executive, also said he doubted the company would be hit by a wider downturn in travel spending caused by the conflict as many of its customers are retired and have “waited their entire lives” to travel.