Royal Caribbean warns fuel surge

Royal Caribbean Group and Carnival Corp used their latest earnings updates to warn investors that higher fuel prices tied to Middle East tensions are adding a fresh cost risk for cruise operators. The comments came as oil markets reacted to conflict-related threats to shipping and energy infrastructure in the region, including concerns around the Strait of Hormuz. Cruise companies burn large volumes of marine fuel, and fuel is one of the biggest variable costs in operating a global fleet. Royal Caribbean said it has partial hedges in place, while Carnival said recent fuel-price moves had already cut into its outlook. ### What exactly did Royal Caribbean say? Royal Caribbean CEO Jason Liberty said on the company’s April 30 first-quarter 2026 earnings call that “the most notable financial impact from the Middle East conflict has been on fuel costs.” Liberty said Royal Caribbean is “approximately 60% hedged for 2026,” but added that fuel prices at then-current spot levels were expected to increase costs by roughly $0.62 per share this year. The company also said two ships had been repositioned out of the area and sent to the Mediterranean, where they were due to begin guest sailings in mid-May. (finance.yahoo.com) ### How exposed is Carnival? Carnival said in its March 27 first-quarter 2026 earnings release that recent changes in fuel prices had a more than $500 million impact on its full-year outlook, though operating improvements partly offset that pressure. The company reported first-quarter net income of $258 million and adjusted net income of $275 million, saying results still beat guidance despite a $54 million unfavorable hit from fuel prices and currency compared with guidance. (finance.yahoo.com) Carnival also told investors that a 10% change in fuel cost per metric ton for the rest of the year would affect its bottom line by about $160 million, or $0.11 per share. ### Why does fuel matter so much for cruise lines? Carnival spent more than $1.8 billion on fuel in 2025, while Royal Caribbean recorded about $1.1 billion in fuel expense, according to industry reporting that cited company disclosures. Those totals help explain why even a modest move in oil prices can have a visible effect on earnings guidance. Cruise operators can sometimes cushion the blow through hedging, itinerary changes or onboard pricing, but they cannot avoid the underlying exposure that comes from running ships across long routes. (carnivalcorp.com) ### Are cruise lines already passing fuel costs to travelers? Passenger contracts at major cruise lines allow for fuel surcharges under certain conditions, though neither Royal Caribbean nor Carnival said in the cited updates that they were imposing one now. The possibility has drawn attention before because cruise lines reserve the right to pass through some cost increases tied to fuel, taxes or fees. Carnival said after its March earnings report that it had no plans to alter its current pricing model, according to industry coverage, while Royal Caribbean’s latest comments focused on hedging and earnings impact rather than a direct surcharge announcement. (cruisemapper.com) ### What should investors and travelers watch next? Carnival’s investor relations site lists first-quarter 2026 materials and upcoming company updates, making its second-quarter report the next formal checkpoint for management’s fuel commentary. Royal Caribbean’s April 30 earnings call is the company’s latest public statement on the issue, and future guidance will show whether spot fuel prices remain near the levels management referenced. (thestreet.com) Oil markets and any further disruption tied to Middle East shipping routes are likely to remain central variables in those updates, based on the companies’ own disclosures. (carnivalcorp.com)