Investors in cruise line operator Carnival Corporation are racing for the lifeboats. The company’s US-listed stock is down 18 per cent since the US-Israeli attack on Iran triggered a massive increase in oil prices. Carnival is particularly exposed since it opted years ago to go without oil hedges. Today, that decision looks penny wise and pound foolish.
Fuel is one of the biggest expenses for ship operators. Hedges aren’t free and investors aren’t all that fussed when prices are low and stable. But they can be quick to jump ship when the tide turns. Shares of rival Royal Caribbean, which has hedged about 60 per cent of its oil use in 2026, are down a more modest 11 per cent since the conflict started.
High fuel prices are doubly frustrating because the industry was just about rediscovering its sea legs after the pandemic, which upended cruises more than most industries. Operators took on eye-watering amounts of debt as vessels sat idle in ports or were taken out of the water completely. Net losses for Carnival between 2020 and 2022 exceeded $25bn.