The Carnival Glory cruise ship heads out to sea near Port Canaveral, Fla., last year. Carnival is the only major U.S. cruise line that doesn't hedge fuel.Phelan M. Ebenhack/The Associated Press
Carnival Corp. CCL-N cut its annual profit forecast on Friday, as higher fuel costs pressure the cruise operator’s margins amid rising geopolitical tensions.
Attacks on oil and transport facilities across the Middle East and disruptions to energy flows through the Strait of Hormuz, which carries about a fifth of global oil flows, since the Iran war outbreak, have disrupted global supply and pushed up oil prices.
The spike threatens Carnival profits as it is the only major U.S. cruise line that does not hedge fuel.
Cruise lines, which rely on heavy fuel oil and marine gas oil among other fuel types, usually turn to hedging to lock in prices via financial contracts and protect against sudden swings.
Carnival expects full-year adjusted earnings per share to be about US$2.21, below its previous expectation of up to US$2.48.
U.S.-listed shares of the company were down 3 per cent in early trading. They have dropped 17 per cent so far this year.
Carnival said the guidance is based on fuel purchased in March and early April, with Brent crude assumed to average US$90 a barrel for the rest of April and May, US$85 in the third quarter and US$80 in the fourth quarter, rather than spot prices.
But its “bookings for 2026 were up double digits, which further pulled forward our already record booked position for the remainder of the year,” CEO Josh Weinstein said.
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Nearly US$150-million in operational gains from higher yields and lower non-fuel costs are expected to help cushion the impact of over US$500-million in higher fuel prices, the company said.
Strong bookings also helped Carnival edge past market expectations for first-quarter revenue and profit. The company announced a US$2.5-billion share buyback.
Earlier this month, Norwegian Cruise Line Holdings NCLH-N also forecast muted annual profit and warned of uncertainties around its fuel costs, while Royal Caribbean RCL-N in January forecast annual profit above estimates, citing a solid start to a key booking season.