(Reuters) – Royal Caribbean cut annual profit forecast on Thursday, signaling that surging fuel costs linked to ongoing tensions in the Middle East are weighing on the cruise operator’s margins.
Cruise operators, heavily dependent on fuel oil and marine gas oil, are navigating a tougher environment as stalled U.S.-Iran negotiations raise concerns about prolonged disruptions to the Middle Eastern supply, driving up oil prices.
Fuel costs, based on current at-the-pump rates, net of hedging, are expected to be about $1.3 billion, or $0.62 per share, higher than the prior forecast, Royal Caribbean said.
Still, its shares rose about 5% in premarket trading, after it beat quarterly profit estimates.
The company expects adjusted profit for fiscal 2026 to be in the range of $17.10 to $17.50 per share, compared with its prior forecast of $17.70 to $18.10.
It posted an adjusted profit of $3.60 per share for the first quarter, compared with analysts’ average estimate of $3.19 per share, according to data compiled by LSEG.
Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shilpi Majumdar
