Investors in cruise line operator Carnival are racing for lifeboats as the company’s US‑listed shares slide 18% since the U.S.–Israeli attack on Iran sparked a sharp jump in oil prices. Carnival chose not to hedge its fuel, a move that now costs it. In contrast, Royal Caribbean, which hedged 60% of its 2026 fuel, fell only 11%.

Fuel remains the biggest cost for ship operators. Carnival has cut daily consumption by 20% since 2019, translating into an estimated $650 million in savings this year versus seven years ago, BNP Paribas notes. Yet the company still carries roughly $26 billion of net debt, about 3.6 times EBITDA, a sharp rise from the pre‑pandemic level.

To shore up investor confidence, Carnival pledged to return $14 billion to shareholders by 2029, but diverting cash risks fleet renewal needed to stay competitive. The company’s lack of hedges leaves it vulnerable when rivals can spread costs evenly. Ultimately, Carnival’s strategy exposes it to a harsher price shock than its peers in the energy market that fuels their operational costs.